SINGAPORE (Aug 23): Clearbridge Health’s wholly-owned subsidiary, SAM Laboratory, is acquiring a controlling stake in PT Indo Genesis Medika, a company incorporated in Indonesia, for an aggregate consideration of about IDR 40.7 billion ($3.8 million).

Under the memorandum of understanding (MoU) inked between SAM Lab, Indo Genesis and PT Kreasi Putra Nusantara (KPN), SAM Lab will subscribe for up to 49% of Indo Genesis for IDR 26.6 billion, with KPN holding the remaining 51% in the company.

Subsequently, SAM Lab will subscribe to bonds issued by KPN, which will be exchangeable at the former’s option into a further 26% of Indo Genesis for IDR 14.1 billion.

Another loan of IDR2.7 billion will be made by SAM Laboratory to KPN, which will be secured against a 5% stakeholding in Indo Genesis.

The latest MoU follows Indo Genesis’ Aug 8 sale and purchase agreement with PT Indofarma Global Medika for the proposed transfer of, and partnering to, the Indonesian healthcare equipment and pharmaceutical products distributor’s 12 joint operation (JO) contracts.

The contracts will allow Indo Genesis to operate diagnostics laboratories in Indonesia’s public hospitals. To facilitate this, SAM Lab intends to extend an interest-bearing loan of up to IDR100 billion or approximately $9.5 million in total.

In a Thursday filing, Clearbridge says its subsidiary’s investment is in line with the group’s plans expand its laboratory testing services business in Indonesia.

It also expects the transaction to result in revenue synergies by allowing the group to leverage on Indo Genesis’ existing network of hospital partners, to deliver Clearbridge’s precision medicine products and services in Indonesia.

As such, Clearbridge says It believes the MoU will “pave the way for the group to become one of the dominant clinical laboratory operators in Indonesia”.

“The proposed investment in Indo Genesis is part of our strategy to expand our laboratory testing services regionally. Based on the historical performance of the JO contracts, we are optimistically confident that we are buying into a business that is earnings accretive for Clearbridge,” says the group’s executive director and CEO, Jeremy Yee.

“It will also present us with opportunities to deploy and cross-sell other esoteric tests and precision medicine products and services offered by the group,” he adds.

Shares in Clearbridge closed 1 cent lower at 24 cents on Thursday.