Synlab remains in talks with Cinven five months after initial approach

Cinven, which already owns 43% of the target’s shares, made its initial EUR 10 per share indicative offer for the laboratory diagnostics provider in March.

Shares in Synlab traded as high as EUR 9.88 during May, shortly before Synlab confirmed it was working with Lazard to advise on Cinven’s approach.

An absence of news on the situation since then has seen the stock drift lower to close last week (5 August) at EUR 8.92 and a 12% spread to Cinven’s indicative bid.

Synlab is scheduled to present 1H23 results on Wednesday (9 August) and an update on the status of talks could be provided then, one of the sources said. Synlab would be expected to make an announcement if the talks had ended, the same source added.

A reason for the lack of news on the deal could be that Cinven was waiting for more visibility on the regulatory situation in France, which has recently been resolved, a Synlab minority shareholder said.

France's National Health Insurance system at the end of July set a new growth ceiling for remuneration of laboratories over the next three years. This gives more visibility on reimbursement in France for Synlab and was significantly better than expected, according to a Deutsche Bank analyst note. The analysts upgraded their target share price on Synlab from EUR 9 to EUR 12 following the regulatory update. France is one of Synlab’s most important markets, accounting for 21% of revenue during 2022, as reported.

Difficult financing markets could also be a reason behind the talks slow progress, the shareholder said.

Cinven’s EUR 10 per share expression of interest was considered below fair value by shareholders polled by Mergermarket during March. Cinven listed Synlab in April 2021 at EUR 18 per share and remains its largest shareholder. Synlab is headquartered in Munich and has a EUR 2bn market cap.

Synlab and Cinven declined to comment.

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