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| Cinven's London offices--Courtesy of Cinven |
European private equity firm Cinven is snatching up German medical lab operator Synlab for €1.75 billion ($1.96 billion), continuing its dealmaking streak weeks after it announced it would shell out $1.3 billion for French diagnostics outfit Labco.
Cinven will combine Synlab with Labco, creating a business that will operate in more than 20 countries and will continue to make acquisitions, people familiar with the deal told The Wall Street Journal. The acquisition gives Cinven a heads-up in a growing market, as the European clinical diagnostic sector is worth more than €75 billion and spending on prevention, prediction and diagnosis is expected to jump to about 30% by 2020, the firm said earlier this year.
And Cinven is no stranger to diagnostics investing, sinking funds into French diagnostics outfits Sebia and Phadia to strengthen its footprint in the field. Cinven ended up selling off Phadia to Thermo Fisher ($TMO) for $3.52 billion in 2011, and passed off Sebia to Montagu Private Equity and Astorg Partners for $1.5 billion last year.
In May, Cinven snatched up Labco a couple of weeks after the company abandoned plans for its previously announced IPO. The deal valued Labco at just over 8 times its earnings before interest, taxes, depreciation and amortization, handing Cinven the company at a discount to the bottom end of the pricing range of Labco's mooted IPO.
Cinven also inherited Labco's international lab presence through the deal. Labco has 160 labs in 7 countries including France, Italy and Spain and is expanding into Latin America, potentially giving Cinven access to a broader market. The diagnostics sector is "growing strongly" Cinven said at the time of the acquisition, and Labco's €650 million in 2014 revenue and more than 6,000 employees could give the firm a boost as it vies for a greater market share.
- read the WSJ story (sub. req.)