Cinven and Astorg have joined forces to purchase LGC Group from KKR (NYSE: KKR). The two global private equity firms spent $3.88 billion (£3 billion) for the firm, according to sources cited in Private Equity News. LGC provides a range of measurement tools, proficiency testing schemes, supply chain assurance standards, and specialty genomics reagents to the life sciences industry. According to our Deal Search Online database, this is the largest deal in the Laboratories, MRI and Dialysis sector, based on disclosed prices in 2019.
This deal ends a four-year partnership that started in December 2015 when KKR acquired LGC for $989 million. At the time, LGC was a portfolio company of Bridgepoint Capital, a European PE firm, and reported revenue of just under $338 million.
Cinven and Astorg are investing in LGC for its organic growth potential, hoping to use it to expand in the healthcare market. LGC has a global presence, operating in 22 countries across five continents.
LGC grew significantly under KKR, reporting an estimated $579 million in revenue for 2019. And since 2015, LGC announced eight transactions in various healthcare sectors, including most recently the sale of its ClariLight molecular diagnostics point-of-care (POC) platform. Edan Diagnostics, Inc., a wholly own subsidiary of Edan Instruments, Inc., bought the platform for an undisclosed price.
The acquisition by Edan includes a partnership with LGC for the development of molecular diagnostic assays designed for Clarilight and the supply of enzymes and oligonucleotides required for manufacturing. The instrument and test cartridges will be developed, manufactured and marketed by Edan, and sold through its expanding global distribution network. The company anticipates the launch of its initial products within 2-3 years.
The acquisition of LGC is a much-needed jolt for the Laboratory sector in the final quarter of 2019. The second-largest deal based on disclosed price was OraSure Technologies, Inc.‘s (NASDAQ: OSUR) acquisition of Diversigen for $12 million. Diversigen provides science-driven, customized solutions for metagenomics sequencing, bioinformatics, and statistical analysis for the study of the microbiome, and their addition complements OraSure’s portfolio of companies such as CoreBiome and DNA Genotek.
In Q3:19, the largest deal in the sector was Exact Sciences Corp.’s (NYSE: EXAS) purchase of Genomic Health, Inc. (NASDAQ: GHDX) for $2.8 billion. Genomic Health provides genomic-based diagnostic tests that improve cancer care, including addressing the overtreatment of the disease. Its lead product is Oncotype DX, which manages clinical and genomic big data to support research and treatment for over 1 million cancer patients.
The companies will combine their cancer diagnostics platforms, Cologuard and Oncotype DX, for a commercial presence in more than 90 countries. The merged company expects to generate $1.6 billion revenue and $1.2 billion gross profit in 2020.