Cinven to invest in Labco A European leader in clinical diagnostics
European private equity firm Cinven today announces that it has agreed to acquire Labco (‘the Group’), one of the largest European operators of medical diagnostic laboratories, from a consortium of investors, for an enterprise value of €1.2bn.
The Group, headquartered in France, operates in France, Spain, Italy, Portugal Belgium and the UK. The Group conducts clinical tests; delivers results to prescribing doctors and patients; and provides assistance with the interpretation of clinical results through in-house laboratory doctors. Labco also operates a large portfolio of hospital outsourcing contracts in Europe, providing services to both ambulatory care and hospitals.
Established in 2003, Labco operates a network of more than 160 routine and specialist laboratories and over 1,000 collection centres across seven European countries. In the year to 31 December 2014, the Group generated pro forma revenues of circa €650 million. It employs more than 6,000 employees and medical personnel, who conduct over 150 million tests each year on circa 20 million patients.
Working together, Cinven’s Healthcare and French teams regard Labco as an attractive investment opportunity on the basis of its:
• Strong market fundamentals, driven by demographic trends, increasing incidence of chronic diseases and the cost benefits of early diagnosis, as well as the increasing trend towards hospital outsourcing of clinical diagnostics;
•Diversification (by geography, payor and business model), which enables Labco to transport medical innovation and operational excellence across borders;
• Medical leadership in specialist areas such as anatomical pathology, genetic testing and nuclear medicine;
• Strong historic financial performance, with stable and strong cash flow generation; and
• Opportunity to further consolidate the highly fragmented European diagnostics laboratory market, from which Labco, with its proven track record of successful acquisition integration, is well placed to benefit.
Cinven Capital Management (V)
General Partner Limited
PO Box 656 Third Floor Tudor House
Le Bordage St Peter Port Guernsey
GY1 3PP
Tel +44 (0)1481 749 730
Fax +44 (0)1481 749 749
www.cinven.com
The clinical diagnostic sector in the EU is worth more than €75 billion, with the clinical laboratory segment representing approximately 33% of the European diagnostics sector. Clinical laboratory expenditure currently only accounts for circa 1% of the overall healthcare costs with significant drivers for growth. Prediction, prevention and diagnosis spending is expected to grow from approximately 20% of healthcare spend today to circa 30% by 2020.
Stuart McAlpine, Partner at Cinven, said:
“The combination of Cinven’s European network in France, Spain and Italy, where Labco operates, together with its longstanding healthcare sector knowledge has enabled us to originate, evaluate and execute this exciting opportunity. Cinven’s investment in Labco builds on its already strong positions in both the healthcare sector, particularly in in-vitro diagnostics following its highly successful (and now realised) investments in Phadia and Sebia, and the French market.”
Alex Leslie, Senior Principal at Cinven, added:
“Labco is a high quality business in the European clinical diagnostics sector. This sector is growing strongly as a result of ageing populations; an increasing focus on the early detection and prevention of illnesses; and the opportunities for healthcare cost savings. The volume of private hospitals outsourcing their clinical laboratory testing is also rising significantly.”
“Cinven intend to grow Labco through further acquisitions, given the fragmented nature of the diagnostics laboratory sector, and international expansion across Europe and into emerging markets. We look forward to working with the team at Labco to achieve this.”
Labco represents the 12th investment from Cinven’s Fifth Fund. Completion of the transaction is subject to customary regulatory approvals.
Philippe Charrier CEO at Labco, added:
“We are very excited about the opportunity of working with Cinven. Labco has generated significant growth across Europe, so it makes huge sense for us to partner with a private equity sponsor with a strong European presence, a proven track record in the healthcare sector, including diagnostics and the ability to help us expand our operations and services across Europe and internationally both organically and through acquisitions.”
“Labco is committed to remaining a leading player in our field; we are confident that Cinven’s investment will enable us to continue developing our first class medical diagnostics services through the use of our cutting edge technological innovation; also consolidating our position as the privileged partner of public institutions wishing to outsource their medical diagnostic services.”
For more information, please contact:
Cinven Partners LLP (advisor to Cinven’s Fifth Fund)
Cinven Partners LLP
Vanessa Maydon
Tel. + 44 (0) 207 661 3325
Email. vanessa.maydon@cinven.com
FTI Consulting
Edward Bridges
Tel. + 44 (0) 207 269 7147 / + 44 (0)7768 216 607
Email. edward.bridges@fticonsulting.com
Notes to editors
• Cinven is a leading European private equity firm focused on building world-class European companies.
• Its funds invest in six key sectors: Business Services, Financial Services, Healthcare, Industrials, Consumer, and Technology, Media and Telecommunications (TMT).
• Cinven funds acquire Europe-based companies that require an equity investment of €100 million or more.
• Its European focus and expertise are complemented by an ability to capitalise on global growth opportunities through its Asia and US offices.
• In European diagnostics, Cinven has successfully realised its investments in:
• Phadia, generating a 3.4x money multiple (August 2011)
• Sebia, generating a 2.4x money multiple (December 2014)
• Prior to Labco, Cinven had invested in 12 companies in the healthcare sector representing €3.0 billion of invested capital.
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