AddLife: History & Future M&A Opportunities

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I'd love to hear about the early history of Addtech's life sciences business. You mentioned Mediplast was an important acquisition; what were the others?

The most strategic acquisition was Triolab who represented Radiometer, who is in blood gas which is a very good business and similar to a Coca-Cola machine. You place the instruments, sell consumables and get organic growth without doing anything. There is a demographic aspect and the fact that you are making more tests in the periphery and in emergency departments, not only in central labs. That's a perfect piece, so Triolab became the extended arm of Radiometer who is a Danish company. It was easy for them to establish because of their relationship with Triolab, but Triolab was always treated as a Radiometer company. Triolab had Stago, a French company in coagulation that was also big business. The third leg was Koriba from Japan, who acquired a French immunology company. Those three businesses account for 65% of Triolab so it was a very stable business. The founder of Triolab, Göran Brandt, sold the company to Addtech.

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There's a lot of dependence on Radiometer; could Triolab lose that?

That came up in the due diligence when we listed AddLife, and Håkan Roos was very concerned because we could list the company then lose half the turnover. I had a good relationship with the CEO of Radiometer and the people from Danaher. We knew it would be difficult for them because it takes several years to get established and they couldn't take it from Denmark. We assessed a low risk for Radiometer to establish themselves. That remains the case today because if they have 45% margin and choose to do the business themselves, the cost of sales would be higher than that because they don't have the critical mass.

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The best part of the business is diagnostics, but there have been few acquisitions there over recent years, is that because it's so difficult to find companies?

To keep momentum, you need very good relations with suppliers, always looking for new opportunities in the market. I believe the company lost this momentum which is dangerous because you lose business focus when you become too administrative. To keep this going, you need to push the people working in the company because they are ambassadors and have their antennae in the market. You should have a way of communicating this information to the management of the company because salespeople meet customers and understand their needs.

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