Investors have snapped up ALS shares after the testing, inspection and certification group knocked back a $2.7 billion private equity takeover bid, setting the scene for a possible bidding war.
ALS shares surged more than 30 per cent after the company rejected an indicative $5.30 a share offer from private equity firms Advent International and Bain Capital, labelling the proposal as opportunistic and low.
"The board believes that the timing of the approach is opportunistic and made at a time when ALS is strongly advancing its growth strategy in its Life Sciences business," ALS said in a statement on Thursday.
The major business of ALS, formerly Campbell Brothers, is its international testing services operations covering minerals, energy, industrial and life sciences, which includes food, environmental and animal health.
The group has operations in 55 countries, with major hub facilities in Australia, Asia, North America, South America, Europe, the Middle East and Africa.
ALS shares hit a high of $5.37 on news of the rejected takeover approach, suggesting investors either expect a revised, higher bid from the two private equity firms, or a rival offer to emerge.
The shares closed $1.10, or 27.16 per cent, higher at $5.15, valuing the company at around $2.6 billion.
Advent and Bain expressed dismay at ALS's decision.
"We are extremely surprised and disappointed that the board of ALS did not accept our indicative offer and the speed with which they have rejected it," the two companies said in a joint statement.
"With access to due diligence we could very quickly finalise a compelling proposal for ALS shareholders to assess."
The private equity firms said their proposal offered compelling value to ALS shareholders and provided access to sector expertise, capital and people "away from the pressures of the public markets."
ALS has reiterated that it sees significant growth opportunities in Life Sciences, and is well placed to capitalise on its position in the area.
The proposed takeover offer comes at a record low point in the cycle for the company's minerals business - which covers geochemistry, metallurgy, mine site and inspection - where ALS says it has a leading global platform.
"The platform has been significantly enhanced by the recent efficiency improvement initiatives and is well positioned to benefit from a recovery," ALS said.
The company said the indicative offer price of $5.30 a share implies a premium of 22.3 per cent, which is significantly below the market average.
ALS said the bid also undervalues the company compared to its global peers in the testing, inspection and certification sector.
ALS said it remains committed to maximising value for shareholders and will consider all options available.
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