Manipal Education and Medical Group (MEMG) has sold its in-house incubated bio-medical equipment service firm MNE Technologies to Italy’s Ital Telematic and Biomedical Services (TBS) for a consideration of Euro 6.3 million ($8.475 million or Rs 38.2 crore).
The euro 125-million TBS Group, listed on AIM Italia, provides outsourced integrated clinical engineering and e-Health services and is linked to over 1,000 hospitals in Europe.
The $2.7-million MNE Technologies, which employs about 120 engineers, is a 10-year-old company under the Manipal Group in the business of servicing hospital equipment that go out of the warranty period.
Manipal Group is, however, retaining the firm’s Malaysian subsidiary under its fold.
The deal was struck over two months back. Talking to VCCircle, MEMG chief executive officer and MD Ranjan R Pai says, “We incubated it 10 years ago, ran it, grew it to size and finally exited it. It is a very good service model. We have a subsidiary of this firm in Malaysia which we own. We may probably look at selling that next year.”
MNE Technologies was incubated as a business borne out of a captive requirement. One of the reasons why the Group exited this business was the inability to scale this model under the Manipal brand name. Since the firm can serve all hospitals, the need for it to become third party and independent was crucial to achieve scale, he adds. MNE Technologies currently has 53 maintenance contracts of which 28 are with hospitals in the Manipal Group while 25 are with others.
For Italy’s TBS Group, the deal offers it a big play beyond Europe. “The transaction is part of the TBS Group’s expansion strategy on promising Asian markets, starting with India,” says Ital TBS in a statement posted on its website.
The deal values MNE Technologies at an enterprise value of 9.5 times EBITDA at March 31, 2010, which is expected to be at 669,400 euro ($894,490). The valuation of 6.3 million euro was also 6.5 times EBITDA at March 31, 2011, which is expected at 972,300 euro ($1.31 million). MNE Technologies is expected to generate revenues of 2 million euro ($2.7 million) and 3 million euro ($4.06 million)at March 31, 2010 and March 31, 2011, respectively. At the end of March 31, 2009, MNE Technologies posted revenues of 1.2 million euro ($1.614 million) and EBITDA of 274,300 euro ($368,612), according to information on TBS website.
The healthcare services space in India has seen only a few in-bound acquisitions but as interest and investment in this space increase, they could perk up. One of the few deals in this area occurred in 2005 when Australian hospital management solutions firm IBA Health acquired Bangalore-based Medicom Solutions for $24 million.
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