Private Equity Firm Cinven to Buy Synlab


June 26, 2015


Private equity deals in the healthcare sector keep rolling in, as reports on Thursday suggested private equity firm Cinven is buying the German medical laboratory operator Synlab. The firm is merging the German-based company with its recently acquired French company, Labco.


The Details of the Deal


The European private equity firm is buying the laboratory operator for around €1.7 billion, according to the reports. The deal would value the company roughly 12 times its expected earnings before interest, tax, depreciation and amortization of €145 million. The news was broken out by Reuters, which cited two sources close to the matter in their report.


So far, there has been no official announcement on the deal and spokespersons for the parties have declined to comment.


The private equity firm is buying the company from its fellow buyout firm, the London-based BC Partners. BC Partners bought a stake in the company in 2009. According to the Wall Street Journal, the reported worth of the deal could mean the private equity firm will make around 2.7 times its investment from the sale.


According to Bloomberg, Synlab’s sales stood at €700 million in 2013, with annual revenue close to €756 million and it currently employs around 7,000 people. The company is currently the second-largest laboratory operator in Europe.


Merging with Labco


The private equity firm will look to merge Synlab with its recent buyout Labco. The firm bought the French operator of medical diagnostic laboratories in a deal worth an enterprise value of €1.2billion.


At the time, the firm said the European clinical diagnostic sector is worth over €75 billion, with clinical laboratories representing around 33% of the diagnostic sector in the region. Therefore, the merging of the two companies will provide the firm a great access to the markets.


Furthermore, the private equity firm believes the prediction, prevention and diagnosis sector will increase its current spending levels in Europe. The current healthcare spending on average in Europe for the sector stands at 20%, but Cinven believes the portion will grow to 30% by 2020.


During the Labco deal, Alex Leslie, the senior principal at Cinven said, “Cinven intend to grow Labco through further acquisitions, given the fragmented nature of the diagnostics laboratory sector, and international expansion across Europe and into emerging markets”.


Plenty of Private Equity Interest


The healthcare sector has seen increasing interest from private equity firms that are looking to shed off some of their dry powder. According to Bloomberg’s report, Cinven was able to outbid its rival private equity firms including the likes of Carlyle Group and EQT.


Private equity firms often opt for the buy and build strategy in the healthcare sector. This helps them to streamline costs and boost performance before they make an exit, either by selling to another company or by listing the company on the stock market.


BC Partners, for example, strengthened Synlab during its time in the company with 60 different acquisitions. These included the acquisition of the Austrian laboratory, FutureLab in 2009.


The deal could be made public in the coming days. If you want to find more healthcare sector private equity deals, you can head down to the DealMarket platform for more information.

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