Sonic Healthcare (ASX: SHL) has signed binding agreements to acquire LADR – Laboratory Group Dr. Kramer & Colleagues (LADR) – one of the ‘Top 5’ medical laboratory groups in Germany.
In CY 2024 LADR’s revenues will be ~A$610 million. The agreed cash and debt free Enterprise Value (EV) for LADR is €423 million and will be satisfied by the issue of Sonic Healthcare ordinary shares1 to the sellers with a maximum value equivalent to ~€222 million, with the balance through cash. The cash component will be funded in Euro from Sonic’s existing cash and debt facilities.
The transaction is expected to be immediately earnings per share (EPS) accretive, reaching high single-digit percentage accretion after three years (including synergies). The return on invested capital (ROIC) will significantly exceed Sonic’s cost of capital once synergies are achieved, with a ROIC in excess of 11% p.a. expected after three years.
With strong cultural and operational alignment between Sonic Healthcare Germany and LADR, significant synergy potential exists in multiple areas of operations including procurement, laboratory overlaps, specialised testing, logistics, equipment maintenance and the supply and distribution of medical consumables.
Since its establishment in 1945, LADR has been owned by the Kramer family, now in its third generation. LADR is a highly reputable market participant with more than 2,800 full-time equivalent staff with its central laboratory located in the town of Geesthacht, to the East of Hamburg. LADR is a national laboratory participant, providing high- quality testing services delivered through a network of stand-alone and hospital-based laboratories throughout Germany.
In addition to its predominant German laboratory operations, LADR also has a presence in Poland and a small joint-venture interest in Finland. The Polish laboratory is majority owned by the LADR group (with founders/local management owning the balance) and operates under the brand ‘badaj.to’. Founded in 1991, it operates in the Silesian region of Southern and South-Western Poland, with annual revenue of ~€30 million. LADR has been a shareholder since 2009 and badaj.to is believed to be the fourth largest laboratory group in Poland, with a strong market share in its region of operation.
“The partnership between LADR and Sonic Healthcare Germany is an important and substantial step for Sonic in Germany and Europe,” Sonic’s CEO, Dr Colin Goldschmidt, said.
“We are honoured and excited to commence our collaboration with the Dr. Kramer family and their many local colleagues, teams and partners. Our closely aligned respective cultures, both based on a commitment to Medical Leadership and high-quality medicine, augur well for a successful integration which will further strengthen our service offering to clinicians and patients, and which will also enhance efficiencies in our operations. I warmly welcome the pathologists, clinicians and staff of LADR into the global Sonic Healthcare group.”
