QML is a substantial business (been in biz. for ~ 80 years) with major market share and an excellent cash flow.
This purchase could also offset the loss of earnings if Mayne goes ahead with the disposal sale of Mayne Logistics.
Strategic a smart move for Mayne's Healthcare business.
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Mayne buys Queensland Medical Laboratory for $268m
09:53, Wednesday, 26 June 2002
Sydney - Wednesday - June 26: (RWE) - Mayne Group Ltd today announced it would buy Queensland Medical Laboratory Group, Queensland's leading pathology services provider, for $268.25 million.
The acquisition will be funded from existing cash reserves and committed, but undrawn, facilities.
Directors expect it to be cash earnings per share accretive immediately, and accretive to accounting earnings within 12 months.
Mayne managing director Mr Peter Smedley said the acquisition broadened Mayne's pathology network to cover all the eastern seaboard states and would deliver shareholder value.
"We are very pleased with the acquisition, given current industry trading multiples and recent industry transaction prices.
"This is particularly so given QML is a very high-quality, market-leading business in the fastest-growing state market for pathology in Australia," Mr Smedley said.
Mayne forecasts QML fee revenues for the 2002 financial year of more than $160 million with EBITDA of about $27 million.
It has market share of more than 50 per cent in Queensland, as well as a small presence in northern NSW and the Northern Territory.
Mayne expects to achieve cost savings of at least $10 million within 12 months from completion of the acquisition, by leveraging its corporate relationships in the area of consumables and leveraging existing pathology corporate infrastructure costs.
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