Mumbai: India’s top two diagnostics services and products companies are likely to merge to form the country’s biggest chain of laboratories in the Rs15,000 crore market, according to three people familiar with the development.
Super Religare Laboratories Ltd (SRL) is set to buy the diagnostics services business of Piramal Healthcare Ltd for Rs500-550 crore, they said, asking not to be identified.
The deal could be announced on Wednesday, one of them added.
SRL is promoted by the Delhi-based Singh family that earlier promoted Ranbaxy Laboratories Ltd.
“We cannot make any official comments on this at the moment,” an SRL spokesperson said.
A Piramal spokesperson said: “I don’t have any information yet from the management.”
“The valuation could be as high as 6-9% of profit in this sector for a strategic purchase,” said a consultant, who didn’t want to be identified as his firm used to advise one of the two companies. “But it could go up to multiples of sales also if the target is able to provide better business synergy and location advantages.”
Piramal Diagnostics Services Pvt. Ltd, which is integrating two joint ventures it acquired last year, has 135 service centres in the country, mostly in Mumbai and western Maharashtra.
SRL has 650 service centres.
Both Piramal Diagnostics and SRL had been exploring options of acquiring smaller companies to expand their market share.
In March, Piramal Diagnostics’ interim chief executive Bhavin Jankharia said his company was keen to make acquisitions in cities where it was already present, as well as in new regions.
US-based Quest Laboratories Inc., which last year set up an Indian subsidiary, has also been in talks with some Indian firms for a strategic acquisition.
Piramal Healthcare’s shares rose 0.37% on Tuesday to close at Rs509.90 on the Bombay Stock Exchange. The exchange’s benchmark Sensex index rose 48.70 points, or 0.27% to 17,985.90.