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Sonic Healthcare (ASX: SHL) is expanding its interests in the European market with the acquisition of LADR, a major medical testing operation in Germany that has been family owned and led for almost 80 years, in a deal worth €423 million ($698.5 million).
LADR, an acronym for Laboratory Group Dr. Kramer & Colleagues, is one of the top five medical laboratory groups in Germany, with interests also in Poland and Finland.
Sonic is acquiring LADR via a share and scrip deal that will bring on board the senior leadership of the German group, comprising CEO Professor Jan Kramer, medical director of infection prevention and control Dr Tobias Kramer and CFO Thomas Wolff who have all agreed to long-term employment contracts with Sonic.
The LADR executives are expected to work collaboratively with Sonic’s existing German leadership team once the acquisition is completed.
LADR brings to Sonic Healthcare annual revenue of about €370 million ($610 million) and EBITDA of about €50 million ($82 million), based on calendar 2024 estimates.
“The partnership between LADR and Sonic Healthcare Germany is an important and substantial step for Sonic in Germany and Europe,” says Sonic’s CEO Dr Colin Goldschmidt.
“We are honoured and excited to commence our collaboration with the Dr. Kramer family and their many local colleagues, teams and partners.
“Our closely aligned respective cultures, both based on a commitment to medical leadership and high-quality medicine, augur well for a successful integration which will further strengthen our service offering to clinicians and patients, and which will also enhance efficiencies in our operations.”
LADR, which employs about 2,800 full-time equivalent staff including pathologists and clinicians, was established in 1945 and is led and owned by a third generation of the Kramer family.
The company’s medical laboratory is located at Geesthacht, which is east of Hamburg in northern Germany.
LADR is a national laboratory participant, providing high quality testing services delivered through a network of stand-alone and hospital-based laboratories throughout Germany.
The latest deal comes on the heels of Sonic adding Medical Laboratories Düsseldorf and Diagnosticum Laboratory Group, as well as several smaller acquisitions in Germany, in recent years.
LADR also has a presence in Poland and a small joint-venture interest in Finland, with the Polish business, in which it has majority control, operating under the “badaj.to” brand.
Medical laboratory revenue accounts for more than 80 per cent of LADR’s group revenue and over 90 per cent of its profit, with the remainder of group revenue derived from a medical supplies trading and logistical services business, and a clinical services division in northern Germany focused mainly on women’s health.
Under the terms of the acquisition, Sonic is issuing shares of about €222 million ($366 million) and the balance in cash which will be funded in euro from Sonic’s existing cash and debt facilities.
Sonic anticipates the deal will be immediately earnings per share accretive, reaching high single-digit percentage accretion after three years, aided by synergies.
Sonic says that through strong cultural and operational alignment between Sonic Healthcare Germany and LADR, significant synergy potential exists in multiple areas of operations including procurement, laboratory overlaps, specialised testing, logistics, equipment maintenance and the supply and distribution of medical consumables.
The acquisition, which is still subject regulatory approvals, is expected to be finalised in the first half of next year.
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