Sonic Healthcare Limited (Sonic) has signed an agreement to acquire 100 per cent of Clinical Laboratories of Hawaii and its associated anatomical pathology practice, Pan Pacific Pathologists (together, "CLH").
Founded in 1971 by Dr. Moon Park, CLH is Hawaii's leading medical laboratory provider with over 70 locations state wide and more than 900 professional, technical, and support personnel offering expert analytical and clinical services in every laboratory discipline. CLH has prospective annual revenues of over US$110 million.
The (debt free) purchase price for CLH of US$121 million equates to a prospective EBITDA (post synergies) multiple of approximately 6.2 times, after allowing for the net present value of tax deductions for goodwill amortisation over 15 years of ~US$19 million. US$3 million of the purchase price is subject to earn-out arrangements. The acquisition will be funded in US dollars from Sonic's existing syndicated senior debt facility and will be immediately earnings per share accretive, a Sonic press release stated.
Settlement of the transaction is expected by September 2008, conditional upon US anti-trust approval and other statutory notifications to the State of Hawaii.
Sonic Healthcare's CEO and managing director, Dr. Colin Goldschmidt said: "The acquisition of Clinical Laboratories of Hawaii further expands Sonic's footprint in the US laboratory market place, and offers synergies with our existing operations in terms of purchasing, esoteric testing and sharing of best practice systems and laboratory protocols.
CLH is a high quality laboratory with a stable growth profile, sound financial performance and with culture and values very similar to those of Sonic. Dr. Park, his executive team and staff have demonstrated outstanding performance over the years and we are delighted to partner with such a dedicated team, all of whom I wish to warmly welcome to the Sonic Healthcare group."
Dr. Park will stay on as a consultant with CLH and the current CEO, Alyssa Park, will remain in place. CLH will join the Sonic Healthcare USA management structure as a new division within the US "federation" of laboratories.
CLH has consistently grown market share through hospital laboratory service agreements and continued expansion into the outreach market. This combination provides continuity of service to doctors and patients, in both the in-patient hospital setting and the out-patient ambulatory care market. With well-established infrastructure on each of the Hawaiian Islands, CLH is positioned for continued incremental growth.