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Cinven to acquire the synlab Group

European private equity firm Cinven is to acquire a majority stake in the synlab Group, a German headquartered provider of human and veterinary laboratory services and environmental analysis across Europe.

This transaction follows Cinven’s acquisition in May of Labco, one of the largest European operators of medical diagnostics laboratories, headquartered in France, for an enterprise value of EUR1.2 billion.
 
synlab, headquartered in Augsburg, in Bavaria, Germany, has operations in 23 European countries.  The Group has a proven track record of identifying and executing buy and build opportunities and has completed 52 acquisitions since 2011. Today synlab operates laboratories in approximately 300 locations and employs more than 7,000 people. In 2014, the Group generated sales of approximately EUR756 million.
 
Cinven’s Healthcare and German teams worked closely together to acquire synlab. 
 
Labco and synlab both benefit from the same fundamental growth trends in the market: driven by demographic trends, the increasing incidence of chronic diseases and the cost benefits of early diagnosis, as well as the increasing trend towards hospital outsourcing of clinical diagnostics to achieve greater efficiencies and cost savings in health systems (with prediction, prevention and diagnosis spending expected to grow from approximately 20% of healthcare spend today to circa 30% by 2020).

The combined business will benefit from diversification geographically, by payor and by business model It will operate in 26 countries across Europe with little direct overlap between Labco and synlab (Labco concentrates in France, Western and Southern Europe and the UK. synlab concentrates in Germany, Switzerland and Central and Northern Europe) so that local operations will remain largely unaffected by the combination.

Together, the combined business will have the strongest medical capabilities in Europe and will be a natural partner for innovation to bring new tests to market and to provide improved patient outcomes, including in areas such as anatomic pathology, molecular biology, genetic testing and nuclear medicine.

Labco and synlab share impressive track records of growth, through acquisition and organically, coupled with stable and strong cash flow generation.

The combined business will be operating in highly fragmented markets across Europe where there are genuine benefits of scale available to operators able to provide diagnostics services more efficiently for patients and payers.
 
Stuart McAlpine, Partner at Cinven, says: “Cinven’s deal origination relies strongly on our matrix of deep sector and regional expertise. Our investments first in Labco and now synlab perfectly illustrate how our Healthcare and regional German and French teams have worked closely together to execute our expansion strategy within the European laboratory diagnostics market. We have been extremely impressed by both these businesses and are looking forward to working with both management teams to achieve significant growth in the future.”

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