Health and care group Ascendis Health has entered into an agreement to acquire the majority of the Scientific Group, including its diagnostics business SG Diagnostics, for a consideration of R283.7-million in cash and shares.

The deal also included a minority interest in a medical business within the Scientific Group, which Ascendis would sell back to the selling shareholders.

“We are extremely excited to announce our latest acquisition as South African and global healthcare swiftly embrace the benefits of new diagnostic and preventive technology. SG Diagnostics offers us an immediate and resilient presence into this highly specialised market. It is also a well-managed, high-growth and strongly cash generative business,” Ascendis CEO Dr Karsten Wellner commented.

He added that the SG Diagnostics acquisition would contribute immediate bottom-line benefit to Ascendis, while also allowing the company to entrench its specialist product ranges and deliver organic growth benefits through integration synergies.

“We are also in a position to offer turnkey solutions to private and government hospitals, which is a vital growth component, taking into consideration the national government’s plans to build 43 new hospitals and at least 213 clinics over the next five years,” Wellner said.

Ascendis pointed out that SG Diagnostics had generated significant growth in revenue as demonstrated by a compound annual growth rate of 14% over the preceding four years, with strong revenue growth expected in the 2015 financial year.

SG Diagnostics was also vying for a large national contract with significant revenue opportunities spread over a five-year term.

“This is a comprehensive value-added deal for Ascendis as SG Diagnostics would have contributed a further R32.8-million profit after tax towards Ascendis’ earnings on a historic annualised basis, resulting in a pro-forma 12% increase in our published June 2014 annual earnings per share,” Wellner pointed out.

He further said the acquisition represented an active and growing market within the local and international holistic healthcare industry.

“Exports account for 40% of SG Diagnostics’ sales, with particularly strong sales growth experienced in both Botswana and Zambia, providing us with new channels through which we can accelerate our African expansion and export strategy,” he said.

He added that this acquisition would contribute significantly to positioning Ascendis’ medical devices platform as a renowned provider of major brands and services.