Mumbai: Quest Diagnostics Inc, one of the world’s largest diagnostics services firms, has quit the race for a majority stake in Mumbai-based Thyrocare Technologies Ltd, officials from the Indian firm told Mint.
New Jersey-based Quest, which had set up its Indian subsidiary in 2008, had been considering Thyrocare as a strategic acquisition.
Wendy H. Bost, director, media relations, Quest Diagnostics, said in an email to Mint: “Quest Diagnostics is not currently contemplating an India acquisition.”
“The foreign company has informed us that it is withdrawing from the race as the valuation seems high,” a senior Thyrocare executive said on Tuesday. He did not want to be named as the information is still confidential.
A divestment at a valuation of Rs600 crore is expected for the assets and brand equity that Thyrocare has built up over the past 14 years, this executive said.
Thyrocare, a privately held company, had posted net profit of about Rs35 crore on revenue of Rs60 crore for the year ended March 2009, according to the same executive.
One of the largest organized diagnostics laboratory chains in India, Thyrocare had appointed Deloitte Touche Tohmatsu India Pvt. Ltd, the local arm of US-based audit and consultancy firm Deloitte Llp, to scout for potential buyers in October 2009.
Earlier this week, Mint had reported that at least seven potential private equity investors, mostly foreign funds, were in talks with Thyrocare.
At that time, promoter and chief executive A. Velumani had said that some foreign private equity (PE) firms and a few diagnostics companies had shown interest in the company.
“It could be a deal for divestment of a majority stake, or even a complete exit if the buyer can match our valuation,” he had said, without giving details of the talks.
The decision to look for a strategic partner was mainly on the back of Thyrocare promoters’ desire to pursue growth in the local market as well as outside India, said the executive quoted earlier.
A banker familiar with the development, but who was not involved in the talks, had earlier said that Thyrocare had been seeking investment partners for the last three years before engaging Deloitte a few months ago.
High valuation expectations on the part of Thyrocare’s management had put off potential investors who had looked at the company earlier, the banker said.
Apart from Quest, Indian diagnostics player Super Religare Laboratories Ltd was also in talks with Thyrocare.
“We had evaluated the company, but didn’t go ahead,” a Religare spokesperson had said last week.
Diagnostics services is a fast-growing segment of the Indian healthcare sector. The segment, largely unorganized, has about 100,000 laboratories.
Large organized laboratory chains such as Super Religare and Piramal Diagnostics Services Ltd are also currently exploring opportunities to consolidate the business.