ALS : enters into Bid Implementation Deed with HRL

asx/media release

For personal use only

30 June 2022

ALS Limited (ASX:ALQ) recommended takeover offer for HRL Holdings (ASX: HRL)

ALS Limited (ASX: ALQ) (ALS) announces that it has entered into a Bid Implementation Deed with HRL Holdings Limited

(ASX: HRL) (HRL) under which ALS will make offers to acquire all of the ordinary shares of HRL it does not already own by way of an off-market takeover at A$0.16 cash per share (Offer).1

The Offer provides HRL shareholders with the opportunity to sell their shares at a premium to recent trading performance as outlined below.

HRL Directors unanimously recommend the Offer to shareholders, in the absence of a superior proposal.2 The HRL Directors, who in aggregate own or control 18.59% of the HRL shares on issue, have indicated that they intend to accept the Offer for the HRL shares that they own or control, in the absence of a superior proposal.2

The Offer is unconditional. HRL shareholders who accept the Offer will receive consideration under the Offer within five business days after receipt of valid acceptance.

ALS and HRL have agreed to a deal protection regime including no shop and no talk rights, a right to match any superior offers and payment of an agreed break fee of $800,000 by HRL to ALS in certain circumstances.

Full details of the conditions to the Offer are set out in the Bid Implementation Deed which is attached to this announcement.

Summary of the Offer

The Offer consideration of $0.16 cents per HRL share (Offer Price) provides shareholders with an attractive premium of:

• 95.1% over the undisturbed closing share price on Monday, 27 June 2022 (27 June 2022 being the trading day prior to the media announcement that ALS was in exclusive negotiations with HRL);
• 85.8% over the undisturbed 30-day volume weighted average price (VWAP) up to and including 27 June 2022;
• 84.2% over the undisturbed 90-day VWAP up to and including 27 June 2022; and
• 43.8% over the undisturbed 2-year VWAP up to and including 27 June 2022.

ALS believes this is an attractive offer for HRL shareholders, providing them with the opportunity to receive certain cash value upon divestment.

The transaction will be funded from ALS' cash reserves and existing debt capacity.

Strategic rationale for ALS

ALS considers the proposed acquisition of HRL as an attractive opportunity to expand its Life Sciences service market share and competitive position in New Zealand and Australia.

1. A$0.16 cash per share (less the amount or value of any 'rights' (to be defined in the Offer) attaching to each HRL share which arise or are paid on or after the date of ALS' Bidder's Statement and which ALS does not receive), subject to any improvement permitted by the Corporations Act.
2. At the date of this announcement the HRL Board had not determined whether it would engage an independent expert to prepare a fairness and reasonableness opinion in relation to Offer. In the event that such an opinion is sought, the recommendation and statement of intention is also subject to the independent expert concluding, and not withdrawing such conclusion, that the Offer is fair and reasonable or not fair but reasonable.

alsglobal.com

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ALS Limited CEO and Managing Director, Raj Naran, said the proposed takeover of HRL will enhance ALS' existing life sciences operations, adding complementary new food and environment capabilities:

"HRL is a leading sampling, laboratory testing and data management provider in Australia and New Zealand. Acquiring HRL provides ALS with a compelling strategic opportunity to gain traction in two key food markets, dairy and honey. This is aligned with our global food strategy that is driven by a commitment to identify higher margin activities, with a focus on more specialist testing and end market specialisation."

"We anticipate regulation as well as safety and quality assurance programmes to continue to drive Food and Environmental testing demand in Australia and New Zealand. ALS will be able to expand geographically its Food and Environmental presence into New Zealand and also add specialist honey, dairy and authentication capabilities to its global client offering, enhancing ALS' position as a trusted partner."

Shareholding

ALS has acquired a relevant interest in 19.9% of HRL shares, as separately announced this morning in a notice of initial substantial holder, from two of HRL's long term institutional shareholders.

Timetable and next steps

The Offer is expected to open by early-July and will remain open for acceptances for a period of no less than six weeks (Offer Period), with the opportunity to extend the Offer Period if required.

Further details regarding the Offer will be detailed in ALS' Bidder's Statement and HRL's Target's Statement, which are expected to be despatched to HRL shareholders in the coming weeks. The Bidder's Statement and the Target's Statement will contain detailed information relevant to the Offer, including benefits for HRL shareholders; and how shareholders can accept the Offer.

Advisers

Highbury Partnership is acting as financial adviser and Baker & McKenzie as legal adviser to ALS in relation to the takeover.

Approved for release by the ALS Limited Board.
-ENDS-
For further information please contact:
Investor Relations	Media
Cameron Sinclair	Lauren Thompson
[phone]	[phone]
[e-mail]	[e-mail]
	Celia Moore
	[phone]
	[e-mail]
About ALS Limited

ALS is a global Testing, Inspection & Certification business. The company's strategy is to broaden its exposure into new sectors and geographies where it can take a leadership position.

About HRL Holdings Limited

HRL provides sampling, laboratory testing, and data management services across Australia and New Zealand.

alsglobal.com

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Bid Implementation Deed

Australian Laboratory Services Pty. Ltd. (ACN 009 936 029)

HRL Holdings Ltd (ACN 120 896 371)

Baker & McKenzie ABN 32 266 778 912 Level 8

175 Eagle Street Brisbane QLD 4000 Australia www.bakermckenzie.com

Table of contents

only	1.	Defined terms and interpretation
2.	The Takeover Bid
	3.	Facilitating the Offer
	4.	Conduct of business
	5.	Public announcements
	6.	Exclusivity
use	7.	Break fee
8.	Representations and warranties
	9.	Termination rights
	10.	Confidentiality
personalFor	11.	Notices
12.	General

Schedule 1

Agreed Bid Terms

Schedule 2

Agreed Public Announcement

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Bid Implementation Deed

For personal use only

Title	Bid Implementation Deed
Date	29 June 2022
Parties	Australian Laboratory Services Pty. Ltd. (ACN 009 936 029) of Level 2,
	299 Coronation Drive, Milton, Queensland, 4064 (Bidder)
	HRL Holdings Ltd (ACN 120 896 371) of Level 12, 145 Eagle Street,
	Brisbane, Queensland, 4000 (Target)

Recitals

1. The Bidder proposes to make the Bid on the Agreed Bid Terms.
2. The Target Directors propose to recommend that Target Shareholders accept the Offer in respect of their Target Shares in the absence of a Superior Proposal and subject to the Independent Expert (if engaged by the Target) providing a Reasonable Opinion.
3. The Bidder and the Target have agreed to certain matters in relation to the conduct of the Bid as set out in this Deed.

Operative provisions

1. Defined terms and interpretation

Dictionary

1.1 In this Deed, unless the context otherwise requires: Agreed Bid Terms means the terms set out in Schedule 1.

Agreed Public Announcement means the public announcement concerning the Bid, substantially in the form set out in Schedule 2, or as otherwise agreed in writing.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited (ABN 98 008 624 691) and, as the context requires, the financial market that it operates.

ASX Listing Rules means the official listing rules of ASX.

Bid means an off-market takeover bid by the Bidder for all Target Shares under Chapter 6 of the Corporations Act.

Bidder's Statement means the bidder's statement to be prepared by the Bidder in connection with the Bid in accordance with Chapter 6 of the Corporations Act.

Break Fee has the meaning given to that term in clause 7.3. Business means the business carried on by the Target Group.

Business Day means a day that is not a Saturday, Sunday, public holiday or bank holiday in Brisbane, Queensland.

1	Bid Implementation Deed