(Reuters) – Buyout group BC Partners has put German laboratory operator Synlab up for sale in a potential deal worth more than 1.5 billion euros ($1.6 billion), three people familiar with the matter said.
The investor has asked potential bidders, mostly other buyout groups, to hand in tentative offers by May 7, one of the people said.
Synlab is expecting to post earnings before interest, tax, depreciation and amortization (EBITDA) of about 145 million euros this year and BC Partners is hoping to fetch a valuation of 11-12 times that, the sources said.
Synlab competes with groups such as Sonic and Quest , which trade at multiples of 11.8 and 9.1 times their expected earnings respectively.
These groups would likely run into antitrust issues if they tried to buy Synlab and are expected to pass on the asset, the sources said, adding Synlab was probably too big to be bought by German peers such as Limbach or Kramer.
Private equity groups such as Advent, KKR, CVC, EQT and Bain as well as pension funds and sovereign wealth funds are, however, expected to hand in offers, the sources said.
“The EBITDA as presented by BC Partners is possibly a bit inflated and a more realistic value may be closer to 130-135 million euros,” one of the sources said, adding the final price would likely come in short of the seller’s current expectation.
The 4.5 billion euros German laboratory market — with the most standardised products being blood and urine tests — offers relatively low prices compared with elsewhere in Europe, but suppliers in Germany are also more consolidated and more cost-efficient, an industry source said.
In this business which benefits from scale, the main players are eager to consolidate further, the source added.
BC Partners and Rothschild, which is organising the transaction, declined to comment.
Last year, an auction by buyout group General Atlantic of German laboratory services company Amedes failed after the investor failed to attract offers matching its asking price.
BC Partners bought a stake in Synlab in 2009 and became majority owner a year later. It has since grown the asset by a series of acquisitions.
BC Partners owns 70 percent of Synlab with management holding the rest.
($1 = 0.9297 euros) (Reporting by Arno Schuetze and Alexander Hübner; Editing by Mark Potter)