News: ACL UPDATE 1-Australia's Healius jumps on review, CEO change amid shareholder value challenges

(Recasts paragraph 1, adds comments from analysts in paragraphs 5-6, updates throughout from paragraph 3)

Healius (HLS) shares jumped more than 14% on Tuesday after the healthcare firm said it would start a review and engage investment advisers following the regulator's move to stop a $1 billion takeover by Australian Clinical Labs (ACL) last year.

Healius also said Chief Financial Officer Paul Anderson will transition to the CEO role, replacing Maxine Jaquet.

The new CEO, "will lead the strategic review, which is aimed at maximising shareholder value in a changing diagnostics market," the Australian company said in a statement.

Healius has assets in imaging and pathology across Australia with a network of pathology laboratories, and diagnostic imaging centers.

"We believe a sale of the imaging division is the most likely scenario, with a partial sale of pathology also possible," analysts at Citi wrote.

"While the sale of imaging would solve the near-term gearing issue, it wouldn't solve the profitability and structural challenges faced by the pathology division, which will take years to resolve."

The Australian Competition and Consumer Commission last December had rejected to the takeover by rival Australian Clinical Labs (ACL), citing deterioration in competition in the domestic pathology services market.

ACL had withdrawn the offer, saying it was worried about the 45% slump in Healius shares ever since the deal was announced on March 20, 2023.

Despite that, ACL saw "compelling" benefits from a merger, and had said it would closely monitor the performance of Healius in the coming months and remains open to a merger.

The healthcare firm said the incoming CEO "has been with Healius for the past year and had a clear understanding of the opportunities and challenges the business faced to create shareholder value."

Shares rose as much 14.2% to A$1.3 in early trade, set for their best session since June 2020, if gains hold. Healius stock was the top gainer on the ASX 200 benchmark index (xjo) .

Stock has fallen 31.2% so far in 2024.