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CORRECTED-German laboratories group Synlab targets post-Easter IPO -sources

(Corrects to read Synlab (not Cinven), paragraph 5)

FRANKFURT, Feb 11 (Reuters) - German laboratory services group Synlab aims to launch its 6 billion euro ($7.3 billion) stock market listing after Easter, seeking to benefit from high investor demand for healthcare assets, people close to the matter said.

From next week the company, owned by private equity group Cinven, will hold presentations for analysts who will then work out valuation estimates in March, while an intention to float will likely be published in early April, they added.

Cinven and Synlab declined to comment.

On the back of strong demand for Synlab’s COVID-19 testing capacities, the group said in December it expects 2020 earnings before interest, tax, depreciation and amortisation rise to 550 million euros.

Synlab could be valued at around 6 billion euros, including debt, in an IPO, while investors will likely subtract the COVID-19 effect from their estimates for future earnings.

Cinven bought Synlab for 1.7 billion euros from buyout firm BC Partners in 2015 and then merged it with France-based Labco, creating Europe’s largest lab services provider handling about 500 million tests a year.

Although European lab operators, providing standard blood and urine tests as well as other medical and veterinary diagnostic services, have been consolidating to cut costs, the industry remains fragmented as reimbursement rules differ across the European Union.

In the first nine months, Synlab last year reported a 23% jump in core earnings to 415 million euros on revenue of 1.8 billion euros. Its COVID-19 testing volumes spiked to more than 2 million tests per month.

As the company faced significant costs to expand its coronavirus testing capacity and elsewhere had to book heavy impairments, it reported a net loss of 75 million euros in the period.

The company is due to publish its 2020 earnings on March 25.

Synlab earlier this year completed a 550 million euro divestment of its Analytics & Services business, focused on environmental testing, to SGS, prompting a ratings upgrade by Fitch.

According to Fitch, about a fifth of Synlab’s sales are currently COVID-19 related, a positive factor that will still be relevant until 2023, albeit likely on a smaller scale. ($1 = 0.8241 euros) (Editing by Jason Neely)

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