The company has acquired Aurora Diagnostics, a US-based pathology business with pro forma revenue of US$310m and EBITDA of US$59m.
Morgan Stanley notes, as anatomical pathology is not subject to funding cuts, the deal dilutes some of the top-line risk in the US and increases the company’s US business representation to 28%.
The purchase price is US$540m, to be funded by a placement and bridging facility. Expected synergies are derived from cross selling opportunities between clinical and anatomical pathology.
Overweight. Target is $27.70. Industry view is In-Line.
Sector: Health Care Equipment & Services.
Target price is $27.70. Current Price is $21.39. Difference: $6.31 – (brackets indicate current price is over target). If SHL meets the Morgan Stanley target it will return approximately 23% (excluding dividends, fees and charges – negative figures indicate an expected loss).