A matter of days after being hit with a raft of 'sell' calls following the release of poor annual results, laboratory testing outfit ALS is facing a takeover, which has prompted it to seek a suspension to trading in its shares.
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"The trading halt is requested pending an announcement by ALS relating to a potential change of control event," it said.
Shares in the company were sold off hard on Monday and again Tuesday following poor year to March results, which indicated earnings have yet to bottom amid continued declines in earnings of its oil and gas unit in particular.
The net loss in the year to March totalled $239.7 million, significantly higher than the $172.7 million lost a year earlier, on revenue of $1.36 billion, which was down from $1.42 billion a year earlier. The main factor in the latest loss was the $314 million write-down of asset values in the wake of the downturn in the resources sector.
If the write-offs, restructuring and other one-off charges are put to one side then the underlying profit for the year stood at $99.5 million which was down from $135.4 million earned a year earlier.
However investor sentiment was hit by the comment by the company it will take at least another three months for its energy unit to return to break even, after group-wide losses for the past two years have topped $400 million.
On Monday and Tuesday, its shares fell a combined 10 per cent to last trade at $4.05, well clear of Tuesday's low of $3.80.
The company raised $325 million from shareholders late last year to repay bank borrowings and to give it the firepower to fund acquisitions in the life sciences sector. Those shares were issued at $3.35 each.
Shares in the company have long been popular with both small investors along with small cap fund managers as it built a global presence in the laboratory testing sector.
Analysts downgraded their forecasts for the group's outlook on its poor results, with Morningstar assessing the 'fair value' of ALS shares to be just $3.
But despite the pressures on its oil and gas testing operations, which are still losing money, ALS has $280 million in kitty to fund acquisitions in the 'life sciences' sector, eyeing food testing services and the like. However it has missed out on recent acquisition targets as rivals were willing to pay more than it would.
