Sonic Healthcare on the Acquisition Trail

Submitted by Share Trading on 18 January, 2011 - 10:01

Australia's largest provider of pathology services, Sonic Healthcare (ASX:SHL) have initiated their acquisition strategy. The company purchased KBL-BML-Unilabo and Woestyn Laboratory in Belgium for $54 million. The company also bought Physicians Automated Laboratory, Inc., (PAL) of Bakersfield, California, for $30 million. The purchase prices were not disclosed by Sonic Healthcare, but did reveal that combined price was expected to equate to an enterprise value about six times earnings before interest, tax, depreciation and amortisation.

With this acquisition, Sonic Healthcare gains its first medical laboratory in California—USA's largest and most competitive market for clinical laboratory testing services. "Europe and the US market are fragmented markets and provide attractive acquisition opportunities for us," Sonic managing director Colin Goldschmidt. "We are the biggest pathology player in Europe and the third-biggest in the US. Our overseas operations make up about 60 per cent of our revenue with Australia contributing the remainder. The three purchases are synergistic acquisitions, culturally, they are similar to our company."

Goldschmidt said that the acquisitions would lift earnings per share immediately and had been funded from existing cash and debt facilities. KBL-BML-Unilabo has annual revenues of $12.2m (€9m), Woestyn Laborator $4m (€3m) and Physicians Automated Laboratory more than $20m (US$20m).