Eurofins to acquire Covance Food Solutions from LabCorp for $670 million
According to Eurofins CEO Gilles Martin, Covance Food Solutions’ service offerings and geographic footprint is an ideal fit for Eurofins. This means no restructuring of either business is necessary, and “synergistic top line market effects are expected on cross selling to each organization’s clients in the regions where the other company is present.”
In a press release, Eurofins said that the $670 million price includes “significant favorable tax benefits of an acquisition of assets in the USA.”
The acquisition will expand Eurofins’ presence in North America, the UK, and Asia as Covance’s 12 facilities across the globe come under Eurofins’ ownership.
“Covance Food Solutions has a strong track record of success offering tailored testing and product design solutions for the food industry and enjoys outstanding credibility with its customers,” Martin added.
Specialized Services could be lost in drive toward lab consolidation, experts say.
ChromaDex sold its analytical testing lab to Labcorp/Covance in the summer of 2017. In the wake of these lab aggregations, some experts say smaller clients with specialized needs may lose out in a scenario dominated by a few big players.
Those in favor of aggregation argue that fewer, larger companies in the game is a potential for cost savings. READ MORE (August 22, 2017)
Acquired by LabCorp in 2015
Covance Food Solutions, a global provider of product design and product integrity services for industries including dietary supplements, fortified food, agricultural biotechnology, and food service, became part of S&P 500 company LabCorp when it was acquired 2015.
For the twelve months ending December 31, 2017, Covance Food Solutions recorded pro-forma revenue of approximately $150 million.
“Covance Food Solutions is a great business and has benefitted substantially from its ownership by Covance and then LabCorp,” said David P. King, chairman and chief executive officer of LabCorp.
“Over the three years LabCorp has owned Covance, it has become clear that the greatest opportunities for us to create lasting value come from the core lab business, the Contract Research Organization, and the enterprise-wide combination that is beyond lab and beyond CRO. The sale of Covance Food Solutions to Eurofins allows us to focus on our core mission of improving health and improving lives, and at the same time better positions Covance Food Solutions to serve the global food supply industry.”
The transaction is expected to close in the third quarter of 2018, subject to customary closing conditions and regulatory approvals, including the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Further terms of the transaction were not disclosed.
Wells Fargo Securities is serving as exclusive financial adviser to LabCorp. Hogan Lovells and Kelley Drye are serving as LabCorp’s legal counsel.