The analytical testing company ALS is now in a billion dollar takeover play

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ALS, the chemical testing and analysis company, is a $2 billion takeover target.

The company went into a trading halt, pending what it said was “a potential change of control event”.

No details were given but Street Talk at the Australian Financial Review says equity groups Bain Capital and Advent are after ALS Limited.

ALS shares last traded at $4.05, down from a year high of $5.85 but well above a low in February of $2.93.

The company, one of the world’s largest and most diversified analytical testing serviced, has been hit hard by the downturn in the energy sector with its major customers cutting costs to meet falling oil prices.

Last week ALS posted a full year loss of $240.7 million as the oil and gas sector dragged down the rest of the analytical testing business.

Revenue for the 12 months to March was down 4% to $1.364 billion. The result included non-cash impairment charges of $314 million after tax against oil and gas investments.

However, ALS is growing its testing outside the minerals sector.

The company is now pursuing growth opportunities in life sciences, particularly in the food sector, and is evaluating a number of bolt-on acquisition targets in Europe and North America.

The life sciences division now accounts for 46% of revenue and the company expects this to grow by high single digit percentages in the next few years.

And the company is bringing costs in its energy business under control.

“The objective is to get the oil and and business to a breakeven point by September this year under current very poor market conditions,” the company said when releasing its full year results.

“The company expects short to mid-term market conditions to remain challenging and unpredictable until the oil price stabilises.”

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