Sale docs land for Crescent’s pathology, bids in four weeks

The bankers said ACL serviced more than 85 hospitals, making it the largest private pathology provider for hospitals, including long-term contracts with Healthscope and St John of God. There was news of $80 million to upgrade the company’s central labs, including a “highly automated” lab in Adelaide, and use of Siemens and Roche platforms.

Revenue has increased to about $500 million a year, up from $262 million in 2016, helped along by acquisitions of St John of God and Perth Pathology in late 2016, while growth options included a recently won Defence contract, and its preferred relationship with Australia’s fastest growing GP network.

Fresh face wanted

What the flyer doesn’t talk about – but is material to the process – is the Australian Competition and Consumer Commission. Australian pathology is highly consolidated, with the big three players Sonic Healthcare (44.5 per cent of the market), Healius (34.4 per cent) and ACL (13.1 per cent) accounting for more than 90 per cent of the market.

The ACCC most recently made its approach to pathology mergers clear in 2016 when Healius (then called Primary) bought Healthscope’s pathology unit in Queensland. The ACCC made it clear it didn’t like to see consolidation between two of the top three players in any one market.

Healius, awaiting $500 million for its medical centres unit, shapes as ACL’s most logical and perhaps keenest buyer. (There were even talks last year, as we revealed.)

Its obvious stumbling block is the ACCC, and is on the sidelines while Crescent Capital and its bankers try to find a fresh face.

Crescent Capital’s dream deal would be to find a new player to acquire ACL – and take on powerhouse Sonic and the trouble-prone Healius.

It is understood serious tyre-kickers received information memorandums last week and first-round bids are due in four weeks.

ACL is expected to be worth $600 million or more.

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