German lab group Synlab hoping for industry consolidation

(Adds CEO comment on valuation)

By Alexander Hübner

FRANKFURT, April 22 (Reuters) - German laboratory operator Synlab, which has been put up for sale by buyout group BC Partners (Other OTC: PGPHF - news) , hopes to be a driving force for consolidation in its European industry under a new owner, it said on Wednesday.

"I hope that our next owner will consider and use Synlab as a platform for consolidation," Synlab Chief Executive Bartl Wimmer told Reuters.

"In the next two years there will likely be at least eight lab operators coming to market, most of them owned by financial investors."

BC Partners is selling Synlab in a potential deal worth more than 1.5 billion euros ($1.6 billion) targeting mainly private equity buyers, three people familiar with the matter said on Tuesday.

"BC Partners aims to sell Synlab at an enterprise value (equity plus debt) of 1.7 to 1.9 billion euros", Wimmer said.

The 4.5 billion euro German laboratory market -- with the most standardised products being blood and urine tests -- offers relatively low prices compared with elsewhere in Europe, but suppliers in Germany are also more consolidated and more cost-efficient.

But Wimmer said that compared to the United States, there was much potential for companies to become more cost efficient by merging in Germany and Europe.

The two largest suppliers in Europe between them command just 5 percent of the market, compared with a 45 percent market share for the largest two players in the United States, he said.

Synlab, the second-largest lab operator in Europe after Australia's Sonic (NasdaqGS: SONC - news) , had 756 million euros in annual revenue and expects to post earnings before interest, tax, depreciation and amortization (EBITDA) of about 145 million euros this year.

"There is potential in Europe for two lab services providers with 2-3 billion euros in sales," Wimmer said.

($1 = 0.9297 euros) (Writing by Ludwig Burger; Editing by Mark Potter)