SGS buys Synlab unit as German COVID-19 tester eyes IPO

ZURICH (Reuters) - Swiss inspections group SGS SGSN.S is buying Synlab's analytics & services unit for 550 million euros ($650.32 million), as the German company focuses on its medical business, including COVID-19 testing for European soccer, ahead of a planned share listing.

SGS also said on Tuesday that organic trading from July-October declined 3.8%, though the fall in September and October was less than 2%. Adjusted operating income rose year-on-year, SGS added, without providing figures, while conceding new regional COVID-19 lockdowns could still hurt sales this year.

The deal for the Synlab unit, with 202 million euros in revenue in 2019 and roughly 2,000 employees, would be fully funded from existing financial resources, Chief Executive Frankie Ng said.

The unit does analysis and testing for sectors including environment, food, hygiene, pharma and products.

“The acquisition...significantly strengthens our global network in key strategic focus areas, including Environment, Food, Life Sciences and Oil Condition Monitoring,” Ng said in a statement on Tuesday.

The transaction is expected to close in the first quarter, with Synlabs saying proceeds will remain with the group.

Synlab, owned by private equity group Cinven, is moving toward a planned stock listing next year, people familiar with the matter have told Reuters.

A slimmed-down Synlab is concentrating on its core medical activities like COVID-19 laboratory testing that it has recently expanded, including a pact with European soccer body UEFA to screen players, trainers and officials aimed at keeping professional games on track even as COVID-19 infections rise.

“While Synlab is concentrating on its core medical activities, (analytics & services) will benefit from new growth prospects,” Synlab Chief Executive Mathieu Floreani said.

SGS said it would provide a strategic update when it issues full-year results in January, adding changes focus on trends like health, nutrition, environment and sustainability.

Reporting by John Miller and Brenna Hughes Neghaiwi; Editing by Michelle Adair and Bernadette Baum