Sonic Healthcare to acquire German lab group for $700m
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The news: Pathology services provider Sonic Healthcare has signed binding agreements to acquire Germany’s Laboratory Group Dr. Kramer & Colleagues (LADR) for an enterprise value of €423 million ($698.6 million).
The numbers: Sonic said it would issue shares in the company to the sellers worth a maximum of €222 million, with the balance payable in cash, which would be funded from Sonic’s existing cash and debt facilities.
The transaction is expected to be immediately earnings per share (EPS) accretive, reaching high single-digit percentage accretion after three years. Sonic said the return on invested capital (ROIC) will significantly exceed its cost of capital once synergies are achieved, exceeding 11% per annum after three years.
The context: Sonic said there is strong cultural and operational alignment between its German business and LADR, with significant synergy potential in multiple areas of operations.
LADR is one of the top five medical laboratory groups in Germany with more than 2,800 full-time equivalent staff, with its central laboratory located in Geesthacht, to the East of Hamburg. LADR is a national laboratory participant, providing high-quality testing services delivered through a network of stand-alone and hospital-based laboratories throughout Germany.
In addition, LADR also has a presence in Poland and a small joint-venture interest in Finland. The Polish laboratory is majority owned by LADR and operates under the brand ‘badaj.to’, and is believed to be the fourth largest laboratory group in Poland with annual revenue of €30 million.
As part of the deal, Sonic will also get a 15% interest in a separate German medical laboratory business, with annual revenue of €25 million. Sonic will inherit a put/call structure for the remaining 85% of equity in this group, with expected cash outflow for this transaction to be €55 million by calendar year 2027.
The source: ASX announcement
