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Eurofins to acquire Covance Food Solutions


2018-05-10

Eurofins Scientific (EUFI.PA), a global scientific leader in bioanalytical testing, announces that it has signed an agreement with LabCorp (LH: NYSE), a leading global life science company, to acquire Covance Food Solutions, which provides product integrity, product safety and consulting solutions for end-use segments that span the entire food supply chain. The transaction is expected to close in the third quarter of 2018, subject to the fulfillment of regulatory and customary closing conditions.

Covance Food Solutions, which became part of LabCorp through its 2015 acquisition of Covance, offers an extensive set of routine and specialized laboratory testing and consulting services focused on ensuring product safety, quality and adherence to targeted internal and external standards for existing and in-development food, beverage and supplement products.

Covance Food Solutions operates an integrated network of 12 facilities across the globe (9 in the US, 2 in the UK and 1 in Asia) through harmonized processes and methods to deliver a comprehensive suite of product safety, integrity and development services to its customers. It employs 850 staff and expects to generate revenues of approximately US$160m in 2018, with an EBITDA margin well in excess of Eurofins objectives.

The agreed acquisition price is US$670m on a cash free debt free basis. This price includes the significant favorable tax benefits of an acquisition of assets in the USA. As Eurofins and Covance Food Solutions have a complementary geographic footprint and service offering, no restructuring of either business is necessary and synergetic top line market effects are expected on cross selling to each organization’s clients in the regions where the other company is present. Based on Covance Food Solutions’ history of outstanding performance, the transaction should be immediately margin and EPS accretive for Eurofins after closing (by about 1 euro per share after financing costs). This is a large investment, but Eurofins is well funded for it, and the asset is high quality. Beyond this specific opportunity, Eurofins intends to remain disciplined in its investments and conservative on its balance sheet structure and leverage.

Comment from Dr. Gilles Martin, Eurofins CEO: “We are extremely pleased to welcome LabCorp’s Covance Food Solutions and its talented teams to the Eurofins Group. Its competencies, reputation for scientific excellence and complementary geographic footprint, client focus and service offerings further strengthen Eurofins’ global offering in the very competitive food testing market. We look forward to working together as an integrated network of independent state-of-the-art laboratories providing our customers access to the full range of services and technological capabilities of the combined Group.” 

Comment from Mr. David P. King, LabCorp’s CEO: “Eurofins has an outstanding reputation in the food quality and development business, which will be enhanced with the addition of LabCorp’s Covance Food Solutions business, offering increased opportunities for its employees and more comprehensive services for customers. The sale of Covance Food Solutions to Eurofins allows LabCorp 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.”