Revised: February 13, 2010
Medhold NV will be acquired for about U.S. $316 million
Sonic Healthcare, Ltd., (SHL.AX) of Sydney, Australia, said last Friday that it would acquire 100% of Medhold NV, a clinical pathology laboratory based in Antwerp, Belgium. Sales price is €232 million, which is about U.S. $316 million. Sonic said the acquisition is conditional upon a small number of closing conditions and is expected to close within two weeks.
Medhold NV is Belgium’s second largest laboratory company. It was created in November 2007 by a merger of AML-Raitol and Medish Labo D Van Waes. Waterland Private Equity became a 50% owner at that time. The clinical laboratory company provides clinical laboratory testing and veterinary testing services.
Waterland Private Equity put the clinical laboratory company up for sale late last year. Dark Daily had originally reported that press accounts had indicated that MedHold NV had incurred losses in both 2007 and 2008. Communications with parties involved in the acquisition of MedHold NV by Sonic Healthcare tell Dark Daily that these published accounts were inaccurate. These parties describe MedHold NV and its subsidiaries as a “successful and highly profitable laboratory group with annual EBITDA of around €28m.”
These sources also added more detail to the announced plans by Belgium’s health system to reduce spending on pathology testing. As explained to Dark Daily, these reductions in spending on clinical laboratory testing will be accomplished, not by a cut in fees, but by another approach. Certain pathology tests will be removed from the reimbursement schedule. This is expected to reduce demand as a result of physician education and monitoring. Collectively, these measures will reduce the overall volume of pathology testing reimbursed by the Belgium’s health system. The savings being sought of €50 million represent less than 4% of the country’s laboratory budget. Further, these actions will be taken in a staged manner, most likely into 2011 in order to help laboratories manage the consequences of the changes.
Medhold’s joint CEOs, Annie Vereecken and Geert Salembier, will continue to head the company, a strategy that is common when Sonic acquires a lab. Medhold has a staff of 300 and operates from a new state-of-the-art reference laboratory in Antwerp. Four smaller laboratories serve northern Belgium and the Brussels metropolitan area. The company also provides anatomic pathology and testing services to hospitals and other referral sources in the Netherlands.
Sonic said Belgium and the Netherlands have a combined population of approximately 27 million people, a factor that meets Sonic’s criteria for growth in stable and reliable laboratory markets in what Sonic calls one of its core regions: Western Europe. It has two other core regions: Australia and North America.
Sonic Healthcare has stated that it has as much as U.S. $1 billion available to fund laboratory acquisitions. In the United States, its most recent laboratory acquisition was of East Side Clinical Laboratory, based in Providence, Rhode Island. That sales agreement was announced on December 1, 2009.
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