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Highlights:
- On Wednesday, Sonic Healthcare Limited (ASX:SHL) notified inking binding deals to acquire Medical Laboratories Duesseldorf (MLD).
- MLD is anticipated to deliver revenues of nearly €50 million in FY2024.
- The transaction is conditional on customary closing terms and conditions, expected to take place before the end of CY 2023.
The provider of laboratory, radiology, and pathology services Sonic Healthcare Limited (ASX: SHL), was down 1.374% and was trading at AU$35.870 on Wednesday, 26 April 2023, at 11:20 am AEST after it updated that it had inked deals to acquire Germany-based MLD.
Let’s know the key takeaways of SHL’s acquisition of Germany’s MLD.
On Wednesday, the ASX200 healthcare stock notified that it had inked binding deals to acquire one of the leading clinical laboratories in Duesseldorf-based Medical Laboratories Duesseldorf (MLD).
The acquired laboratory is anticipated to deliver revenues of nearly €50 million in FY2024. The laboratory was established in 1968 and is led by three pathologist partners and their team, who will remain with SHL after the transaction. They will work together closely with SHL’s federation of laboratories in Germany.
The purchase price of €180 million (cash and debt free) will be financed in Euro currency from SHL’s present cash and debt facilities. The major portion of the purchase price is tax deductible in Germany above fifteen years of time as goodwill amortisation. This transaction is immediately EPS accretive, and the ROIC will go beyond SHL’s cost of capital.
The earnings a security and the return on invested capital accretion will rise more as substantial synergies in several sections of infrastructure and operations (comprising procurement) are attained. The transaction is conditional on customary closing terms and conditions, consisting of medical regulatory consents. It is anticipated to take place prior to the end of CY 2023.
Though it is a major strategic step for Sonic Healthcare Germany, the transaction is not deemed to be material for SHL.
SHL’s acquisition of Diagnosticum Laboratory Group
Earlier in April, the company had announced that it had inked binding deals to acquire one of the biggest clinical and anatomical pathology laboratory groups running in the SE of Germany, Diagnosticum group of laboratories.
Diagnosticum is anticipated to deliver €65 million in revenues in FY2024. With twenty-five pathologists, the German group runs fifteen laboratories, throughout its regional geography.
The purchase price of €190 million (cash and debt free) will be financed in Euro currency from SHL’s present cash and debt facilities. The major portion of the purchase price is tax deductible in Germany above fifteen years of time as goodwill amortisation. This transaction is immediately EPS accretive, and the ROIC will go beyond SHL’s cost of capital.
The earnings a security and the return on invested capital accretion will rise more as substantial synergies in several sections of infrastructure and operations (comprising procurement) are attained. The transaction is conditional on customary closing terms and conditions, consisting of medical regulatory consents. It is anticipated to take place prior to the end of CY 2023.
