EBO-Ebos

[Crackity]

I think it is more likely to be Australian Greencross Vets,otherwise they would have said Green Cross Health.

You are so smart Percy! 

[Shareguy]

A decent aquasition if it goes ahead to mitigate the loss of CW contract.

TPG, which took Greencross private in 2019 at $5.55 per share, sold a 45 per cent stake in the pets and vets business to AustralianSuper and the Healthcare of Ontario Pension Plan in early 2022. That transaction valued Greencross at more than $3.5 billion. Greencross' latest accounts, for the 12 months to June 26, show revenues climbed from $1.3 billion to $1.6 billion. Net profit after tax fell from $88 million in 2021 to $83 million

[Shareguy]

Likely in my opinion that a CR will be announced to fund this acquisition, if it goes ahead.

Have been looking at the last capital raise in 2021 to fund the Lifehealthcare business. For that CR a discount to the closing price of 5.5 percent was offered.

Closing price for the trading holt for Green Cross is $38.60. Based on same 5.5 percent discount would be $36.67 for the new shares.

I note the LifeHealthcare acquisition was heavily oversubscribed. Its non underwritten retail offer wanting $105m raised $412m.

There is a lot of funds sitting on the side lines waiting for good opportunities. Will be interesting

[Basil]

Happy to watch from the sidelines.  Petcare has been on a real rollercoaster ride.  When the pandemic hit there was an explosion in demand for pets as people were desperate to nourish their souls in deeply troubling times.  Prices for popular breeds of puppies went ballistic and litters sold out sight unseen for many thousands of dollars each.  It drew a lot of new breeders into the industry, (I even thought about becoming a breeder myself...of you guessed it, Beagles), but the market has now changed a lot and many of them are now stuck with litters they can't sell as demand has waned badly and supply has shot through the roof. During the pandemic. people spent all sorts of money on their new much adored pet, fueled on by vast amounts of money printing by the Govt and an inability to spend money elsewhere with lockdowns.   

Fast forward nearly 4 years and we have heaps of relatively new pet owners who had no idea that their pet entailed a level of expense not entirely dissimilar to having another child, especially if he's a big boy like my dog Tony the Pony who, frankly, eats like a horse.   Combine that with a cost-of-living crisis and some pet owners have buyers or adoption remorse, (not me, I love my new best mate).

You can graphically see this roller-coaster if you do some research into shares that specialise in all things pet.  Start with Chewy and Bark and have a look at their share price history.  I'm not sure all the decay in spending has flowed through into FY23 earnings and we'll see more contraction in pet spend in FY24 and beyond as the cost of living crisis really bites hard.  The risk here with this acquisition as I see it is that the tail could wag the dog.  The rights issue might be so big and so many shares issued that it's not really eps accretive even if they think it is based on recent earnings.

[lorraina]

I am sure Ebos are well aware of the issues in this sector,as they already own the other half of Animates, and own two pet food manufacturers in VitaPet and Blackhawk.

ps.A great number of pills and onitments used by humans are also used for animals.

[winner (n)]

Ebos had no problem raising $840m capital for Life Healthcare.

Small discount at $34.50

And share price headed up to $45 odd

Will need a decent cap raise for this acquisition

Maybe at $36.50 this time. Even Sybil's will probably take part

And the share price wil head back to $45/$50 when it's plain to see the profits coming through as expected

All good stuff eh

[winner (n)]

Good thing acquiring another petcare business is that petcare margins are a lot higher than health

H123 showed petcare ebitda margin ~17% v healthcare ~4%

More petcare will help overall group margin ...good stuff

[winner (n)]

In 2011 after Ebos forked out $109m and acquired Masterpet as a means of expanding beyond healthcare many market watchers said what 'surely not ..."what the heck, pet food of all things" reaction was that Masterpet seemed to hold the shareprice back before punters realised it was a pretty good deal.

The Masterpet CEO was quoted at the time " Ebos is a great fit for our staff, our customers and our suppliers.

Together we share many of the core competencies required to be successful in a market focused on health professionals, whether that's pets or people, doctors or veterinarians."

And the rest is history

Animalcare revenues now are A$560m and A$100m ebitda and the to be acquisition is a big step change on this

[Basil]

I am sure Ebos are well aware of the issues in this sector,as they already own the other half of Animates, and own two pet food manufacturers in VitaPet and Blackhawk.

ps.A great number of pills and onitments used by humans are also used for animals.

My dog gets a skin rash that's quite common for the breed.  Wish it was as you suggest.  My vet suggested I try a brand of antihistamine tablet that were only about $20 for 100 tablets, (20 cents per tablet).  She said, in about 30% of cases they work.  Unfortunately, that didn't work for Tony so he's on a far more expensive tablet, (25 times the price), that's still under patent and they're $5 each from the vet.  He needs 1 a day.  Just as well I have deep pockets lol 
They come off patent in 2026 and I'm looking forward to the generic substitute pricing.

[winner (n)]

 AFR says Greencross valued at $3.5billion ...that's a big number ....even for Ebos

[Shareguy]

FB says that CW contract is a loss of $75m to $80m EBITDA from 2024.

If this acquisition goes ahead not only does it replace the CW contract but replaces it with a much higher margin business.

Ebos FY23 delivered $518m EBITDA from Healthcare and $98m from animalcare.

As Winner has pointed out H123 showed petcare ebitda margin ~17% v healthcare at 4 %

This is going to be a huge CR even for Ebos. You only need to look at the share price growth over the last 10 years to see how well this company has done.

Some say it's expensive but I reckon quality is worth a premium. Also something to be said about sleeping well without worry.

Disc one of my larger positions that I'm keen to add more at the right price.

[Average_Punter]

Trading halt extended till tomorrow.  Emmmm, I wonder what the institution's think of the deal 🤔...

https://www.nzx.com/announcements/421919

[Average_Punter]

Extended for another day.  Institution's not keen on the deal?

https://www.nzx.com/announcements/421998

[winner (n)]

Extended for another day.  Institution's not keen on the deal?

https://www.nzx.com/announcements/421998

Maybe Sybos not to keen to pump half a billion bucks into a petcare business from capital raise

But you'd hope that Ebos would have sorted that out with them before going too far down the track

[winner (n)]

Are Ebos after the whole of Greencross or just taking TPGs remaining share ...after all didnt TPG sell down a large chunk to somevsuperfunds not that long ago.