Shares of diagnostics, pathology and radiology giant, Sonic Healthcare Limited (ASX: SHL), have jumped over 2% higher today following a decision to spend big on an acquisition in Switzerland.
In an announcement to the ASX, Sonic said it has signed a binding agreement to acquire Swiss medical laboratory group, Medisupport S.A.
Medisupport is a market leader in Switzerland and currently has 10 centres across German and French speaking regions, the company said. It has annual revenues of roughly $222 million AUD (CHF 160 million).
Sonic's CEO, Dr Colin Goldschmidt, said the deal will accelerate the company's push into the Swiss laboratory market.
"Together with our already-strong Zurich-based operations, Sonic moves into the clear number one position in the Swiss laboratory market, providing an excellent platform for future growth and service enhancement," Mr Goldschmidt said.
The purchase price for Medisupport is approximately $384 million (CHF 277 million) in cash, funded from existing debt facilities, and an additional 3,559,452 ordinary shares, worth just shy of $70 million based on a price of $19.62 per share. Including the shares, the deal will cost approximately $450 million.
Sonic says the deal represents an EBITDA (earnings before interest, taxes, depreciation and amortisation) multiple of around 8.0x, pre-synergies, and will be 8% earnings per share accretive initially.
Is it a good deal?
The deal isn't a 'bargain' by any means. However, given Sonic's tremendous ability to grow acquisitively in global markets it seems a fair price to pay.
