Cinven-owned Synlab to sell environmental business before 2021 IPO

Germany’s Synlab has put its environmental business up for sale to streamline the laboratory services group ahead of a planned stock market listing next year, people close to the matter said.

Synlab, which is owned by buyout fund Cinven, has invited potential buyers for Synlab Environment, which could be valued at between 300 and 400 million euros including debt, to submit non-binding offers next month, the sources told Reuters. 

Cinven bought Synlab in 2015 for 1.7 billion euros ($2 billion) from private equity firm BC Partners and then merged it with France-based Labco, creating Europe’s largest laboratory service provider which handles about 500 million tests a year.

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

Synlab Environment, which offers testing of water, air, soil, fuels and waste materials, has annual core earnings of 30-40 million euros on revenues of 210 million euros and bidders are expected to value it at 10-12 times its earnings, they said.

Synlab, Cinven and Goldman Sachs, which is advising on the sale, all declined to comment on the planned sale, which the sources said is part of a plan to prepare Synlab for a 5-6 billion euro initial public offering in the first half of 2021.

Cinven is working with Lilja as its advisor and is expected to appoint global IPO coordinators later this year.

Augsburg-based Synlab last year reported adjusted earnings before interest, tax, depreciation and amortization of 444 million euros on revenues of 2.1 billion euros.

In the first half of 2020, its net loss widened to 12 million euros from 2 million euros in the year-earlier period as Synlab faced a lower number of standard medical tests as patients made fewer visits to their doctors.

It also had significant costs to expand its coronavirus testing capacity.

Source: Reuters

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