Last Friday, Agfa announced the acquisition of the Brazilian Healthcare company WPD.
WPD was founded in 1989 and is the second largest Healthcare IT systems provider in Brazil, claiming a 9% market share.
Our view:
Agfa states that WPD will add around 7% to 2012 Agfa’s Hospital Information Systems revenues, implying that WPD should contribute about € 7m to € 10m in sales on a FY basis. WPD is profitable and shows margins comparable to Agfa’s mid-term HC targets (10-11%), so WDP should contribute about € 1m to operating profit next year.
Overall, this is a fairly small acquisition (less than 1% of Agfa’s Healthcare sales = € 1.2bn), but it gives Agfa access to the large and growing Brazilian Healthcare IT market. Agfa will initially try to cross-sell its products such as PACS systems into the WPD client base, and as from 2014 Agfa will also combine the WPD HIS solution with its own (31,31 PLN, -1,48%) HIS system.
The transaction price is not disclosed, and Agfa only states that this is a share deal.
Conclusion:
A small but seemingly interesting acquisition for Agfa. No impact on our investment case. We reiterate our Accumulate rating and € 2.8 target on Agfa.