SINGAPORE (Aug 8): Singapore Medical Group (SMG) has proposed to fully acquire its 38.1% owned associated company, Lifescan Imaging, an imaging and radiology firm, for a consideration sum of S$8.5 million.

In a Monday statement, the healthcare services provider says the remaining 61.9% stake would have contributed an additional net profit of S$348,000 for 1H16.

The earnings-accretive acquisition will be funded via the issuance of 33.36 million new SMG shares at about 25.6 cents each, and carries a price-to-earnings (P/E) ratio of 12.3.

Shares of SMG closed 22.9% higher at 29.5 cents on Friday.

SMG says the overall consideration represents a 11.6% discount from the lower range of valuation carried out by independent valuer, Deloitte & Touche Financial Advisory Services.

Beng Teck Liang, SMG’s CEO and executive director, recalled that Lifescan was a loss-making entity when the group first acquired a stake in August 2015. The group hence had to adopt an incremental approach to “limit the potential risks associated with the business” via a shareholding of 38.1%.

He added that SMG’s efforts to turnaround Lifescan’s business has since “paid off” as the firm returned to profitability this year.

“As part of the group’s key objective in enhancing shareholder value, the directors believe that this value-driven acquisition would fuel growth in the newly earmarked diagnostic business segment,” says Beng.

“We have identified this segment to be a key growth driver for the Group, as we continue to expand our diagnostic imaging assets. As our network of medical specialists leverages on this acquisition to promote more cross-selling opportunities, we are confident that this will contribute positively to our financial performance for the second half of 2016.”