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Roper Industries adds Sunquest in $1.4B transaction

by Lou Whiteman | Published July 30, 2012 at 11:09 AM

Industrial equipment maker Roper Industries Inc. said Monday, July 30, it would acquire Sunquest Information Systems Inc. for $1.415 billion, expanding its presence in the diagnostics and laboratory software market.

Tucson, Ariz.-based Sunquest provides clinical and anatomic laboratory software used in 1,700 hospitals worldwide to improve workflow and organize data. The company was acquired by Vista Equity Partners in 2007, and was recapitalized in 2010 in a deal led by Huntsman Gay Global Capital LLC and including Vista, Credit Suisse Group and Neuberger Berman Group LLC.

Roper, of Sarasota, Fla., said the purchase should generate at least $140 million of Ebitda by 2013, and helps to build its medical platform.

"We expect Sunquest to benefit in all economic environments from very favorable market forces -- an aging population, expansion of anatomic pathology, and the need for reduced healthcare costs and improved quality of care," Roper chairman and CEO Brian Jellison said in a statement. "Sunquest's software and application engineering capabilities deliver an outstanding return on investment for their customers. The company has attractive cash return characteristics and generates significant recurring revenue through long-term customer relationships and very high retention rates."

The deal includes $25 million in cash tax benefits.

Oppenheimer & Co. analyst Christopher Glynn said the deal "appears consistent with the acquisition strategy investors expect," bringing in recurring revenue at an affordable price. Roper also said Monday that it earned $114.8 million, or $1.15 per share, on sales of $724.9 million, meeting analyst expectations, and raised its full-year adjusted earnings outlook to $4.84 to $5 per share, up from $4.75 to $4.91, on benefits from Sunquest and the strong dollar.

Barclays plc's David Baron, Jared Cohen and Mark Hudson were financial advisers to Roper, with Jefferies & Co. assisting Sunquest. A Kirkland & Ellis LLP team including partners David Breach and Stuart Casillas represented Vista Equity Partners.

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