Hills Limited’s plan to spin off its health technology business has been terminated by merger partner Lincor Solutions.
The deal would have seen Hills Health Solutions (HHS) demerge from Hills and form a new company with health technology provider Lincor Solutions, to be renamed as Lincor Limited, which would list on the ASX through an IPO.
Hills chief executive David Lenz said the two companies couldn’t come to an agreement on pre-IPO funding after the merger was delayed in September due to “current market volatility”.
“Following our advice to the market in November 2016 of the decision to defer the IPO and demerger due to market volatility, Hills and Lincor Solutions have considered a variety of pre-IPO funding options,” Lenz said.
“Unfortunately, none of the funding options presented to the board and management of Hills were, in our view, acceptable or in the best interests of Hills’ shareholders.”
Lenz added that the termination would not affect the existing relationship between Hills and Lincor. The two have been in partnership since 2014 and have won major contracts with healthcare providers such as Adelaide Hospital, Blacktown Hospital and Sydney Northern Beaches Hospital
“Hills continues to invest in its health business and look for other opportunities in this growth sector,” Lenz said.
HHS generated $31.3 million in revenue in the 2016 financial year, with earnings of $1.3 million. The business unit accounted for 9.5 percent of Hills’ $328.9 million revenue in 2016.