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| Labco CEO Philippe Charrier |
France's Labco is selling out to U.K. private equity firm Cinven for €1.2 billion ($1.3 billion), a couple of weeks after the company ditched plans for its previously announced IPO.
The deal values 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, The Financial Times reports. The Paris-based company pumped the brakes on its €440 million IPO earlier this month the day trading was supposed to begin, citing market volatility. 3i, a London-based private-equity firm which holds a 17% stake in Labco, will also reap benefits from the sale, bringing in £41 million ($63 million) in proceeds, according to Bloomberg. But Cinven is staying quiet about the sale for now, declining to comment to the FT.
Picking up Labco could portend big things for Cinven as it looks to snatch up competitors in the field, the FT notes. Founded in 2003, Labco boasts an extensive international presence with 160 labs in 7 countries including France, Italy and Spain. The company brought in about €650 million in sales last year and is expanding into Latin America, potentially giving Cinven access to a broader diagnostics market.
And Cinven is no stranger to diagnostics investing, sinking funds into Sweden's Phadia and France's Sebia to expand its industry footprint, according to the FT story. Labco's lab network and Cinven's investing know-how could result in a fruitful union as hospitals look to beef up their diagnostics offerings.
A sale to Cinven also marks a strategy change for Labco after the company unveiled plans last month for an IPO to reduce its debt and generate cash for new acquisitions. "We aim to become the major pan-European operator, with our medical project and our quality commitment at the heart of our strategic focus," Labco CEO Philippe Charrier said in a statement. "In addition to providing greater financial flexibility, the upcoming listing will raise our profile."
But the company halted its IPO and began gauging takeover interest from private-equity firms earlier this month, people familiar with the matter told Bloomberg, pointing to an increasingly competitive market for medical diagnostics as companies deal with pricing pressures and a shift toward products for chronic disease prevention.
- read the Financial Times article (reg. req.)
- here's the Bloomberg story