Sonic Healthcare has signed binding agreements to acquire Germany-based Laboratory Group Dr Kramer & Colleagues (LADR), for an enterprise value of €423m ($446.9m).
The acquisition will be financed through a combination of Sonic’s shares and cash, with the latter being funded from existing resources.
This strategic move is expected to be immediately accretive to earnings per share, with significant accretion and return on invested capital anticipated within three years.
The return on invested capital is anticipated to significantly exceed Sonic's cost of capital, with expectations of an 11% per annum return post-three years.
Synergies are expected to be fully realised within this period, enhancing multiple operational areas such as procurement, specialised testing, equipment maintenance, laboratory overlaps, supply and distribution of medical consumables, equipment maintenance and logistics.
The enterprise value includes a 15% stake in a separate medical laboratory business in Germany, which generates annual revenue of approximately €25m.
Sonic is set to acquire the remaining 85% equity through a put/call structure, with an estimated cash outflow of approximately €55m by 2027.
The integration of LADR with Sonic's existing German operations will be overseen by the senior leadership teams of LADR and Sonic.
The leadership of LADR, including CEO and medical director professor Jan Kramer; CFO Thomas Wolff; and infection prevention and control medical director Dr Tobias Kramer have committed to long-term roles within Sonic following the acquisition.
Sonic Healthcare CEO Dr Colin Goldschmidt said: “The partnership between LADR and Sonic Healthcare Germany is an important and substantial step for Sonic in Germany and Europe.
“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.”
The completion of the transaction is contingent upon customary closing conditions, such as antitrust clearance, and is expected to be finalised in the first half of next year.
This acquisition follows a distribution agreement signed in July 2023 by Microba Life Sciences and Sonic Healthcare through its subsidiary Douglass Hanly Moir Pathology for an advanced infectious disease test, MetaPanel.
