Mumbai-based Metropolis Health Services, which operates one of India’s largest path lab chains with over 45 facilities, is in advanced talks to acquire a 60% stake in a London-based path lab chain. The target company, it is learnt, operates eight path laboratories across the UK.
It is learnt that the Rs 100-crore Metropolis will shortly start the due diligence exercise and the deal could close as early as December. The deal size is pegged at around £3 million. Confirming the development, Metropolis Health Services chairman Sushil Shah told ET: “We are in fairly advanced acquisition-related talks with a UK-based path lab chain. We cannot share further details now.”
Incidentally, Metropolis Health Services also proposes to offload about 10-12% to raise nearly Rs 80 crore to part-finance growth plans. It is in talks with two overseas private equity firms in this light. “This is one of the options we are evaluating. However, we may also raise debt from banks in case we do not get the desired valuation,” said Mr Shah.
Metropolis expects to come to a decision on the private equity deal in two months. Last year, ICICI Ventures had invested Rs 35 crore in Metropolis and holds nearly 18% in the company.
Metropolis is currently on an overseas expansion drive. At present, it runs six overseas facilities in Sri Lanka, UAE and Seychelles. “All our overseas path labs are run in partnership with a local player. In line with this strategy, we are interested to acquire majority ownership in the UK lab chain,” said Mr Shah.
The company is also finalising plans to enter the US market. It is in talks with two hospital chains in Pennsylvania and New Jersey to roll out facilities. “While the US plans are yet to mature, we will soon set up four labs in South Africa, a network of labs in Thailand and facilities in Abu Dhabi, Bahrain and Kuwait,” Mr Shah said.
Metropolis is also exploring options for acquisitions in India and has set aside a corpus of about Rs 70 crore for this.
“We are evaluating acquisition options in North India, Gujarat, Maharashtra and Kolkata. This apart, we are setting up a greenfield facility in Kolkata which will be operational in November. We will invest about Rs 10 crore over the next two years to make the Kolkata facility our eastern region hub,” Mr Shah said.
The Rs 3,000-crore domestic diagnostic laboratory market is highly fragmented with some 40,000 path labs across the country.
Source: Economic Times