Sonic Healthcare Limited is pleased to announce that it 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 ~€370 million (~A$610 million) with EBITDA (postAASB 16 Leases) of ~€50 million (~A$82 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 shares 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 3 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 3 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. Synergies will
develop incrementally and are expected to reach their full level within 3 years of
settlement.
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 highquality 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.
Medical laboratory revenue represents over 80% of LADR’s group revenue and over
90% of its profit, with the remainder of group revenue derived from a medical supplies trading and logistical services business, and a clinical services division in Northern Germany focussed mainly on women’s health.
Included within the EV noted above is a 15% interest in a separate German medical
laboratory business, with annual revenue of ~€25 million. Through the acquisition of
LADR, Sonic will inherit a put/call structure for the remaining 85% of equity in this group and is therefore likely to acquire the balance based on a similar EBITDA multiple to that applicable to the LADR transaction. The expected cash outflow for this transaction will be ~€55 million by CY 2027.
The integration of LADR with Sonic’s existing German operations will be led
collaboratively by the experienced senior leadership teams of both Sonic Healthcare
Germany and LADR. Prof. Jan Kramer (CEO and Medical Director), Dr. Tobias Kramer
(Medical Director – Infection Prevention and Control) and Mr. Thomas Wolff (CFO)
have all agreed to long-term, ongoing employment with Sonic.
Sonic’s 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. 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.”
The transaction is subject to customary closing conditions, including antitrust
clearance, and is expected to close in H1, CY 2025.
