Dr Lal PathLabs Limited has agreed to acquire Sequoia Capital-backed Suburban Diagnostics in an all cash deal, the company said on Tuesday evening.
New-Delhi based Dr Lal PathLabs is making the purchase at an enterprise value of 18.5 X of FY22 audited Earnings before Income Tax Depreciation and Amortisation (EBITDA) of Suburban Diagnostics, it said.
This works to a minimum enterprise value of Rs 925 crore with a cap of Rs 1,150 crore, the company told the exchanges. Suburban Diagnostics reported revenuesof Rs 294 crore in FY 21 and an EBITDA of Rs 57.5 crore, the media statement said.
Dr Lal PathLabs will fund the deal through existing cash reserves, it said. The deal will close in a month.
Sequoia Capital, which invested in Suburban Diagnostics via multiple tranches from 2012 to 2016, owns approximately 40.5% of the business, according to VCCEdge, the data intelligence platform of VCCircle.
Dr Sanjay Arora, the Founder of Suburban Diagnostics will join Dr Lal PathLabs as the Group Medical Director.
Avendus Capital and Candle Partners were financial advisors while Phoenix Legal was the legal advisor to Suburban Diagnostics. Ernst & Young was the financial advisor while L&L Partners was the legal advisor to Dr Lal PathLabs.
With this deal, Dr Lal Pathlabs will get access to 44 laboratories and diagnostic centures and 150 collection centres, the company said.
This is the second major diagnostics deal this year afterPharmeasyparent API Holdings acquired Thyrocare Technologies Ltd in June for over Rs 4,546 crore.