Donald Trump’s win in the US presidential election, the resultant rise in market volatility and a dose of good old fashioned cold feet have combined to sink the proposed merger by Hills Limited (HIL) of its health solutions business with global firm Lincor.
The two companies say they will try again in 2017 – nervy investors didn’t care when, they just abandoned the shares, sending them down well over 20%.
By the close yesterday that had ended a turbulent day off 22% at the day’s low of 46 cents.
In a short statement issued to the ASX yesterday, Hills blamed “market volatility” for the delay. The statement however came on a day when the Trump inspired boomlet from late last week evaporated and the ASX 200 lost nearly 1% in value.
The merger deal was announced on September 13, and seemed on track at the AGM 10 days ago. But that was before the US elections last Tuesday and the shock win by Trump.
Hills had plans to merge its Hills Health Solutions business with Lincor Solutions Inc to create a new business, Lincor Limited, which would be demerged, spun off and listed on the ASX.
It was that part of the plan that generated all the interest in Hills shares, as buying those positioned investors for entry into the new company would be involved in the hot healthcare sector.
But that was not to be according to yesterday’s statement – at least for now.
"Due to current market volatility, the proposed Lincor Limited initial public offering to raise the required capital has now been deferred along with the proposed demerger," Hills said in a statement to the ASX on Monday.
"Hills and Lincor Solutions Inc shareholders, however, remain committed to the merger given the significant synergies available to the combined business."
Through its Health Solutions business, Hills is a provider of monitoring and communications systems for hospitals and aged care facilities. Lincor is a provider of patient management software and communications systems at health and aged care facilities around the world, including in Australia.
Investors can see the synergy between the two companies, hence the enthusiasm for the deal and the spin-off. The market will be looking for an update and timing for the deal when Hills reports its interim financials.
