Dr Lal Pathlabs acquires Sequoia supported Diagnostics Chain

Target Date - November 25, 2021

Dr Lal Pathlabs (LPL) has acquired 100% stake in Suburban Diagnostics (SD)

Key points to note

  • SD is a Sequoia supported entity, who had put in Rs 40 crore into the Company in 2012. Sequoia had been drawing up an exit plan – explored IPO route previously and recently the more recently the Company was put on block (for sale).
  • It’s a 100% cash deal valuing the Company at Rs 925 crore plus certain performance linked payments capped at Rs 225 crore
  • Acquisition is aimed at strengthening LPL’s presence in the western part of the country / State of Maharashtra
  • LPL gets access to SD’s 44 laboratories and diagnostics centres as well as 150+ collection centres
  • For the financial year ended March 31, SD’s revenues stood at Rs 294 crore and EBITDA at Rs 57.5 crore. LPL’s numbers during the same period were Rs 1,581 crore and Rs 487 crore respectively. Economies of scale surely play a role in this business and LPL is expected to improve upon SD’s numbers.

The deal seems a good strategic fit for LPL and seems reasonably priced especially in the current market conditions.

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