KKR to make 3x its money on sale of LGC

KKR is poised to generate just over 3x its money through its sale of U.K. life science tools company LGC Group, according to a source familiar with the matter.

Four years into its investment, the buyout firm said Thursday it agreed to sell LGC to European private equity groups Cinven and Astorg.

Financial terms of the transaction weren’t disclosed; however, this source and a second said the deal assigns LGC a value of approximately 3 billion pounds ($3.9 billion). The valuation implies an Ebitda multiple just over 20x, one of the sources said.

Buyouts initially reported in August that JP Morgan had been retained to advise on an upcoming sales process for LGC, with a potential deal expected to value the company north of $3 billion.

London’s LGC provides a range of scientific measurement and testing products and services. The company serves almost 50,000 labs worldwide, with customers across the biotech and pharmaceutical, clinical diagnostics, food, agbio and environment and research and government markets.

The company’s revenue surpassed 448 million pounds in 2019, according to a Thursday news release.

Led by CEO Tim Robinson, LGC fueled growth through an aggressive M&A strategy under KKR’s ownership. LGC has executed 15 transactions since the firm’s initial acquisition in December 2015.

KKR’s investment was done primarily through the KKR European Fund IV, which is fully invested across 14 transactions.

LGC’s M&A playbook has focused on building out its geographic footprint in North America and Asia. The company most recently struck a deal in August to purchase a majority stake in Toronto Research Chemicals, a supplier of synthetic organic bio-chemicals.

In other notable M&A, LGC in November 2018 bought SeraCare Life Sciences, a supplier of biological products to the diagnostics industry. The transaction marked an exit for Linden Capital Partners and was valued between $200 million and $250 million, a source previously told Buyouts.

KKR bought LGC in December 2015 from Bridgepoint Partners.

Financial terms weren’t disclosed, but the competitive auction for LGC was anticipated to command more than 600 million pounds, Reuters reported at the time.

Bridgepoint acquired LGC from LGV Capital in 2010 in a deal valued at 257 million pounds.

LGC’s inception dates to 1842, when the Laboratory of the Board of Excise was established in London to regulate tobacco adulteration.

Action Item: Check out Cinven’s latest Form ADV: https://bit.ly/34dxb9e