Two healthcare companies are some of the top contenders for the bid
The Ontario Municipal Employees Retirement System (OMERS), one of the largest pension plans in Canada, has put LifeLabs Medical Laboratory Services (LifeLabs), the country’s largest medical testing company, up for sale, as reported in an article by the Globe and Mail.
The Globe and Mail’s sources who were familiar with the sales process stated that OMERS had hired investment banks to look for a new owner for LifeLabs in the previous year. Evercore Group LLC (Evercore) was chosen to run the process while a Canadian bank was also brought in.
The pension fund has invested more than $2.5 billion in the medical testing company and the asset manager was asking for a premium valuation on the business, which was more than the capital OMERS has put into its acquisitions.
Sources said that OMERS has told potential buyers that LifeLabs can serve as an infrastructure sector investment as there can be dependable revenues derived from providing medical services to an aging population.
With its primary clients being provincial health ministries and private insurers, sources said that potential buyers should take governments’ and the insurance industry’s willingness to continue paying for medical tests into consideration when it comes to the price that they are offering for LifeLabs.
According to OMERS Infrastructure’s statement in an email to The Globe and Mail, it has yet to be in a late-stage discussion with any interested parties.
“As a long-term investor, we are always evaluating opportunities for the businesses within our portfolio. There have been some preliminary discussions with multiple parties who have expressed interest, which may or may not lead to a transaction,” it said.
Among multiple bidders showing interest in acquiring LifeLabs, Andlauer Healthcare Group (Andlauer) and Quest Diagnostics Inc. (Quest), two healthcare companies, were leading the bid. Andlauer is a medical logistics business in Ontario while Quest is a US clinical laboratory firm.
The sale could determine if the medical testing company will remain under the control of Canadian health care companies or if US healthcare companies will continue its expansion into the concentrated market for laboratory testing in Canada.
OMERS has previously tried to sell LifeLabs but has failed to find a buyer. If the pension fund successful sells LifeLabs, it will be its second sale of a medical testing business since the last year. Notably, OMERS and Labcorp sold Dynalife Medical Labs, its jointly owned company, to Alberta Precision Laboratories in August 2023.
OMERS acquired MDS Diagnostic Services in 2007 for $1.33 billion and rebranded it as LifeLabs. LifeLabs became Canada’s largest medical testing business in 2013 after its $1.2 billion purchase of CML Healthcare Inc.
