US life sciences company LabCorp has agreed to acquire contract-research specialist Chiltern in an all-cash deal worth approximately $1.2 billion. Employing more than 4,500 people around the world, the UK-based Chiltern expects 2017 revenues of around $550 million and adjusted EBITDA of $95 million.
One reason for LabCorp's transatlantic pursuit of Chiltern could be the changing face of the US healthcare sector, which has undergone significant consolidation following the introduction of the Affordable Care Act in 2010. Combine a declining amount of attractive domestic targets with the shadow of uncertainty cast by the nation's current political stalemate, and it may make sense for US acquirers to look outside the country for deals. Indeed, LabCorp's takeover is in part based on the notion of expanding the company's global footprint.
While the number of M&A deals completed stateside still outweighs those done in Europe, the gap has been shrinking over the past five years, per the PitchBook Platform, as you can see below:
Percentage of healthcare services M&A by region
Over that same span, the global healthcare services industry has been home to varying amounts of M&A activity. While acquirers completed just 523 control transactions in the space during 2013, that figure shot up 987 in 2015, per PitchBook data. But last year brought a dip to 756 deals, and this year is on pace for another steep decline, making 2015's peak look more and more like an anomaly.