LONDON (Reuters) – Montagu Private Equity agreed to sell French medical diagnostics business Sebia to rival Cinven, the latest in a series of buyouts focused in niche areas of healthcare.
The deal announced on Monday values Sebia at about 800 million euros including debt, 12.5 times its 2009 earnings, sources familiar with the situation said. It gives Montagu a three-times return on its original equity investment.
Montagu has been mulling options for the business but Cinven, which had been eyeing the company for over a year, made a pre-emptive strike by tabling an offer for the business on Thursday, one of the sources said.
“We were deeply impressed by Sebia, which we see as a robust organisation with exciting prospects. Under the strong leadership of Benoit Adelus, we believe the company will continue its rapid growth trajectory for many years to come,” said Cinven partner Nicolas Paulmier in a statement.
In December Apax Partners bought medical courier firm Marken in a rapid, 975 million pound ($1.48 billion) deal, similiarly designed to head off a formal auction.
However other potential deals have stumbled. Montagu itself recently scrapped plans to float or sell BSN Medical, the German bandage maker, one of the sources said, after market jitters threw doubt on the value it could achieve from a listing.
And on Monday sources familiar with the matter said German industrial conglomerate Siemens (SIEGn.DE) had decided to scrap plans to sell its hearing aid unit.
Since Montagu’s acquisition of a majority stake in 2006, Sebia, which sells reagents and cancer diagnostic equipment using electrophoresis technology, has increased share in existing markets and has expanded into new high growth areas.
Electrophoresis allows doctors to test blood and other human serums for the presence of cancer.
The business’s profits are growing at double-digit rates, the previous source said. Cinven is familiar with the sector, owning allergy and autoimmune diagnostics business Phadia. It believes Sebia is at a similar stage of development to Phadia when it bought that business in November 2006 and has similar scope for international growth, the source said.
Quoted peers Axis Shield (ASD.L), Meridian Bioscience (VIVO.O) and Qiagen NV (QGEN.DE) trade on about 12.9 times current earnings, the source added.
The deal is Montagu’s fourth sale of a company to another private equity house since last summer, after British Car Auctions, Kalle and Survitec, and comes ahead of a planned fundraising later this year.
Cinven will buy out Montagu and minority investors Intermediate Capital (ICP.L) and Astorg Partners. Management will keep a stake in the business.
Sebia took on 140 million euros of loans to back its 2006 buyout, according to Reuters Loan Pricing Corp data.
Goldman Sachs and Weil Gotshal advised Montagu. Latham & Watkins was legal adviser to Cinven. Boutique Oloryn Partners and lawyers from Frieh & Associes advised Sebia management. ($1=.7274 Euro) ($1=.6594 Pound)
(Reporting by Simon Meads; Editing by David Holmes and David Cowell)