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Cinven hires IPO adviser for German lab group Synlab -sources

By Arno Schuetze and Pamela Barbaglia
·2 mins read

By Arno Schuetze and Pamela Barbaglia

FRANKFURT/LONDON, Feb 12 (Reuters) - Buyout fund Cinven has launched preparations for a potential stock market listing of German laboratory services group Synlab, while also sounding out potential buyers for a 5.5 billion euro ($6 billion) deal, sources close to the matter said.

Cinven, which has backed Synlab since 2015, is working with investment banking boutique Lilja on the initial public offering (IPO), which could take place in the second half of the year, two sources said on condition of anonymity.

Cinven and Lilja declined to comment.

Augsburg-based Synlab ranks as Europe's largest laboratory service provider, handling about 500 million test results per year. Cinven bought it for 1.7 billion euros from another buyout fund, BC Partners, and then merged it with France-based Labco.

European lab operators, providing standard blood and urine tests as well as other medical and veterinary diagnostic services, have been consolidating to cut costs. But the industry remains fragmented as healthcare reimbursement rules differ considerably between European Union member states.

Cinven has also started holding exploratory talks with rival buyout funds ahead of its planned listing, the sources said, as part of its efforts to cash out.

The London-based private equity house has tapped the likes of Advent, Bain, Carlyle and EQT about a potential sale, they said.

The potential suitors declined to comment.

Synlab is expected to generate earnings before interest, tax, depreciation and amortization (EBITDA) of 450 million to 500 million euros this year, the sources said.

It could be valued at between 5.4 and 6 billion euros including debt, representing a multiple of 12 times its core earnings, the sources said.

Synlab grew its organic revenues by about 2% to 1.55 billion euros in the first nine months of 2019, according to documents available to bondholders, while its adjusted core earnings grew 1.8% to 326 million euros.

Adjusted net debt stood at 2.9 billion as of September 2019.


Some of the potential suitors for Synlab are also considering whether to merge Synlab with Swiss peer Unilabs to create a European laboratory powerhouse, the sources said.

Unilabs, which is owned by Apax Partners, is gearing up for a potential 4 billion euro sale with the help of Rothschild, three sources told Reuters.

Unilabs, which has about 350 million in core earnings, has been offered to investors with a long-term horizon, including KKR and EQT, which may deploy their respective infrastructure funds for a possible bid, one of the sources said.

Apax, Rothschild, KKR and EQT declined to comment.

Rival players in the lab industry include Sonic Healthcare which trades at 13.6 times its expected core earnings, according to Refinitiv data. ($1 = 0.9165 euros) (Editing by Barbara Lewis)