Eurofins does not rule out significant acquisitions – CFO
Eurofins Scientific [EPA:ERF], a European life sciences and testing company, does not rule out making large acquisitions, CFO Hugues Vaussy said. The company could consider buying targets valued up to EUR 500m, he added.
The company could finance such large acquisitions by raising new debt, Vaussy said, adding that its last EUR 200m fundraise from CDPQ in June 2016 enables the company to be more reactive if an interesting opportunity arises.
As of 30 June 2016, the company’s net debt leverage ratio stood at adjusted EBITDA 1.88x, down from adjusted EBITDA 2.54x at the end of 2015. The company could increase its leverage ratio up to EBITDA 3x or 3.5x if needed, as long as it is not too detrimental to the company’s credit profile, Vaussy said.
However, apart from potential large buys, Eurofins will not change its acquisition strategy and will primarily focus on small opportunities like it did in 1H16, Vaussy said.
From January 2016 until the end of July 2016, the company completed 16 acquisitions, which represent an annualized turnover of EUR 100m.
For 2016, Eurofins aims to gain a total of EUR 200m in revenues through acquisitions, he said.
The company is looking for opportunities active in all its sector segments, in any country, and with test portfolios that are complementary to its own, Vaussy said, without giving further details.
Eurofins has previously been reported by this news service to be one of the front runners in the sale process for Adiuva Capital-backed Gesellschaft fuer Bioanalytik, for which first round bids were due at the end of July 2016. Vaussy declined to comment on the situation.
Eurofins will likely remain opportunistic and consider opportunities worldwide, as long as they enable the company to become the local leader in one of its sector segments, an analyst following the company said. However, the company might move its focus away from France and the Nordic countries, where its market share is already significant, the analyst suggested.
The company will not make an acquisition if it doesn’t expect a yearly 12% ROI before taxes in the three to four years after the completion of the deal, Vaussy said.
Excluding potential large buys, Eurofins could spend up to EUR 1bn until 2020 for its M&A strategy, he added.
Eurofins, which posted a EUR 1.95bn turnover in 2015, intends to reach a EUR 2.5bn turnover in 2016.