MUNICH/SYDNEY (dpa-AFX) - Laboratory services provider Synlab is divesting its activities in Switzerland. The Munich-based company is selling its business there to competitor Sonic Healthcare. Europe's largest laboratory chain had grown in the past through numerous acquisitions. Currently, however, the company is struggling with the flagging Corona tailwind and is now reducing its debt with the sale. The transaction will also have a positive impact on profitability, as the company announced in Munich on Tuesday. Sydney-based Sonic Healthcare is paying 150 million Swiss francs (just under Eur154 million), according to its own statement.

One trader spoke of slightly positive news. In early trading, Synlab shares, which are listed on the SDax index of smaller companies, were up about one percent, but the price had previously lost more than a fifth this year.

Synlab investors have needed strong nerves for some time. After the Borsengang in May 2021, the stock had indeed risen by almost 40 percent within six months in the wake of good business in the Corona pandemic. However, from the high of 25 euros in November of the same year, the share price fell rapidly. In the summer of 2022, the share price once again managed to rise above the issue price of 18 euros, but even these times are now long gone, as Synlab has recently been selling fewer and fewer Corona tests. After a profit warning last February, the share price fell further. The share price is currently just under 9 euros. Investors of the first hour are therefore sitting on losses of around half.

After reviewing its activities in Switzerland and developments in the diagnostics sector as a whole, the group decided to accept Sonic Healthcare's offer, said Synlab CEO Mathieu Floreani. In Switzerland, Synlab said it has a total of 26 laboratories, blood collection sites and administrative locations, which are expected to generate sales of about 50 million euros in the second half of the year, according to the statement.

Synlab, meanwhile, is sticking to its sales forecast of 2.7 billion euros for fiscal 2023, which was capped in February, despite the sale. It also said the transaction would have a positive impact on its adjusted Ebitda margin within the given guidance of 16 to 18 percent. Adjusted net debt would be reduced by around 154 million euros - in line with the acquisition price quoted by the Australians.

Jefferies analyst James Vane-Tempest, meanwhile, noted that the agreement comes at a time when there is still talk of a possible complete takeover of the laboratory services provider by financial investor Cinven. The major shareholder had expressed interest in the spring in view of the fall in the share price. There is speculation that he may have been able to take Synlab off the stock market at a favorable price./tav/ngu/jha/