TORONTO, Ontario – One of the largest pension plans in Canada, Ontario Municipal Employees Retirement System (OMERS), has put up for sale the country’s largest medical testing company, LifeLabs Medical Laboratory Services, after building the business over 17 years. The company has drawn interest from potential buyers in both the United States and Canada.
OMERS hired investment banks to help find a new owner for Toronto-based LifeLabs. The plan has invested more than $2.5 billion in the company and is now seeking a premium valuation on the business, drawing in multiple bidders, including two leading contenders: Andlauer Healthcare Group and Quest Diagnostics Inc.
Andlauer Healthcare, which recently acquired the National Hockey League’s Ottawa Senators, is a medical logistics business with a significant market capitalization. On the other hand, Quest Diagnostics is a leading U.S. clinical laboratory company with a substantial market capitalization of its own.
OMERS has previously tried to sell LifeLabs in previous processes but failed to find a buyer. However, the current auction could determine whether LifeLabs remains in Canadian hands or falls under the control of U.S. health care companies.
The potential sale of LifeLabs comes at a time when the company is a major player in the medical testing industry, performing 112 million tests annually across three provinces in Canada.
OMERS is positioning LifeLabs as an infrastructure sector investment, emphasizing its dependable revenues from providing medical services to an aging population. However, any potential buyer will have to consider the willingness of government and the insurance industry to continue paying for medical tests when determining the price they offer for LifeLabs.
If OMERS does indeed sell LifeLabs, it would be the asset manager’s second sale of a medical testing business in the past year. This move comes as OMERS oversees $127.4 billion in assets for public employees and routinely recycles capital by selling long-term holdings and putting the proceeds back into new investments.