17 January 2011

Sonic Healthcare (“Sonic”, SHL.AX) is pleased to announce that it has completed two separate acquisitions in Belgium, KBL-BML-Unilabo Laboratory (“KBL”), based in Antwerp and the Woestyn Laboratory, based in Mouscron, and one in the USA, Physician's Automated Laboratory (“PAL”), based in Bakersfield, California.

KBL was founded in 1970 and is one of the leading laboratory groups in the Greater Antwerp region of Flanders, with revenues of ~EUR 9 million per annum. Sonic has acquired 100% of the shares in the group from its five founders who have all agreed to remain with Sonic’s Belgian team following the transaction. It is intended that, through the course of 2011, KBL’s operations will become fully integrated with those of Sonic’s Medhold Group, which has recently relocated to a new state-of-the-art laboratory in Antwerp. The merger will result in substantial operational and financial synergies and lead to the creation of the largest laboratory in Belgium.

The Woestyn laboratory, located in Western Belgium approximately 100 kilometers from Antwerp, was founded by Mr Jacques Woestyn in 1971 and has annual revenues of ~EUR 3 million. CEO Dr Sophie Woestyn will remain in this position post-acquisition.

The two Belgian transactions follow on from the recently completed acquisition of PAL in the USA. PAL was established in 1967 as a high quality, physician-owned laboratory and has developed a leading market share in Bakersfield (180km north of Los Angeles) and surrounding areas. The company has experienced significant growth and has current revenues of over US$20 million per annum.

PAL will be the base for a new Sonic Healthcare USA “California” Division and is Sonic’s initial step towards building a growing laboratory infrastructure in the most populous State of the USA (over 32 million residents). The senior management and pathologists of PAL have extensive industry experience, with a deep knowledge of the Californian market, and will assist Sonic’s further expansion in California, both via organic growth and through further synergistic acquisitions. PAL will work with Sonic’s other USA operations to achieve cost (mainly relating to purchasing) and revenue synergies.

All three acquisitions are immediately earnings per share accretive and have been funded from existing cash and debt facilities. The combined purchase price for the three laboratories is expected to equate to an enterprise value of ~6 times EBITDA once synergies are realized.  Sonic warmly welcomes the management, pathologists and staff of the three groups into its world-wide team.
 


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