EBO-Ebos

[Hectorplains]

EBOSin $3.75 billion deal to buy Greencross; Macquarie, UBS on raise

Sarah Thompson, Kanika Sood and Emma Rapaport
Nov 21, 2023 – 6.46pm

Trans-Tasman pharma distributor EBOS will pay $3.75 billion to acquire TPG Capital-backed pets and vets business Greencross, details of which were first revealed by this column last week.

Street Talk understands EBOS will seek to raise almost $2 billion, pegged at a 12 per cent discount to the TERP via joint lead managers UBS and Macquarie. TPG Capital, AustralianSuper and Canadian pension fund HOOPP are expected to roll in alongside management. However, the scrip component would mean the trio would probably end up as shareholders in EBOS.

EBOS's largest investor, Zuellig, was understood to be supportive of its big M&A bet and would tip into the rights issue.

It is being advised by Macquarie Capital's David Mustow, while Lazard Australia and UBS have also been in its tent. Greencross's owners have been working with Jefferies' Michael Stock.

The raise comes five days after Street Talk revealed EBOS was closing in on a deal to buy Greencross – last valued at $3.5 billion when AustralianSuper and Canada's HOPP acquired a 45 per cent stake from TPG Capital early last year. The PE firm plucked Greencross off the ASX boards in early 2019 for $675 million equity value.

Greencross lists 150 veterinary clinic locations on its website and also owns retail chain Petbarn. It booked $1.6 billion revenue and $83 million after-tax profit in the 12 months to June 26, according to accounts filed with the corporate regulator.

EBOS has made its move after Aussie vets roll-up VetPartners – with $104 million pro forma adjusted EBITDA for 2023 – fetched a $1.4 billion price tag from Swedish private equity firm EQT Partners, as revealed by this column.

It's an especially sweet victory for EBOS, which in 2015 worked through an auction for Greencross. It has had to wait eight years to get its hands on the business.

EBOS's biggest moneymaker – on a gross operating revenue basis – is still pharmacy, bringing in 41 per cent, while animal care is the smallest at 12 per cent. This should change with the company a step away from owning Greencross

[Shareguy]

EBOSin $3.75 billion deal to buy Greencross; Macquarie, UBS on raise

Sarah Thompson, Kanika Sood and Emma Rapaport
Nov 21, 2023 – 6.46pm

Trans-Tasman pharma distributor EBOS will pay $3.75 billion to acquire TPG Capital-backed pets and vets business Greencross, details of which were first revealed by this column last week.

Street Talk understands EBOS will seek to raise almost $2 billion, pegged at a 12 per cent discount to the TERP via joint lead managers UBS and Macquarie. TPG Capital, AustralianSuper and Canadian pension fund HOOPP are expected to roll in alongside management. However, the scrip component would mean the trio would probably end up as shareholders in EBOS.

EBOS's largest investor, Zuellig, was understood to be supportive of its big M&A bet and would tip into the rights issue.

It is being advised by Macquarie Capital's David Mustow, while Lazard Australia and UBS have also been in its tent. Greencross's owners have been working with Jefferies' Michael Stock.

The raise comes five days after Street Talk revealed EBOS was closing in on a deal to buy Greencross – last valued at $3.5 billion when AustralianSuper and Canada's HOPP acquired a 45 per cent stake from TPG Capital early last year. The PE firm plucked Greencross off the ASX boards in early 2019 for $675 million equity value.

Greencross lists 150 veterinary clinic locations on its website and also owns retail chain Petbarn. It booked $1.6 billion revenue and $83 million after-tax profit in the 12 months to June 26, according to accounts filed with the corporate regulator.

EBOS has made its move after Aussie vets roll-up VetPartners – with $104 million pro forma adjusted EBITDA for 2023 – fetched a $1.4 billion price tag from Swedish private equity firm EQT Partners, as revealed by this column.

It's an especially sweet victory for EBOS, which in 2015 worked through an auction for Greencross. It has had to wait eight years to get its hands on the business.

EBOS's biggest moneymaker – on a gross operating revenue basis – is still pharmacy, bringing in 41 per cent, while animal care is the smallest at 12 per cent. This should change with the company a step away from owning Greencross

Thanks for posting

12 percent discount to terp sounds good

[Shareguy]

It's off


https://www.nzx.com/announcements/422075

[Mos]

It's off


https://www.nzx.com/announcements/422075

Probably a good thing. Touted metrics were eye wateringly expensive.

[Hectorplains]

Probably a good thing. Touted metrics were eye wateringly expensive.

Something smells a touch fishy about the whole thing...and I don't think it's the pet food either. 

[Hectorplains]

Something smells a touch fishy about the whole thing...and I don't think it's the pet food either. 

Finally, some questions being asked about how the hell the details of this deal ended up in such detail with AFR and why ASX are turning a blind eye to this?  Ebos are but one example of the issue. ASIC commissioned a report on this problem - nearly a decade ago! That found the number of leaks reported in the media was "significant" in Australia between 2006 and 2013.  However; their rules cover listed companies, not the bankers, the analysts or other interested parties. 10 years and they've done what about it? 

Anyway - it was not the media leak that sunk the deal.  Another leak has identified that instos would not support the couple of billion needing to be raised. 

[Shareguy]

Talk in the Australian that Ebos are in talks to buy Paragon care. PGC on the ASX

https://paragoncare.com.au/sites/default/files/2023-09/ParagonCare%2BAnnual%2BReport%2B2023%2BOnline%2BFA_270923-compressed.pdf

[Waltzing]

does not this juggernaut ever slow down?

[lorraina]

Seems a bit odd going from Greencross $3,500 mil [$3.5 bil] down to a $145 mil PGC deal.?
PGC's revenue of $308 mil will not add much to EBO's $12.38 billion revenue.
If it goes through PGC must have an agency EBO want.But not a meaningful acquisition in my opinion.

[Hectorplains]

Talk in the Australian that Ebos are in talks to buy Paragon care. PGC on the ASX

https://paragoncare.com.au/sites/default/files/2023-09/ParagonCare%2BAnnual%2BReport%2B2023%2BOnline%2BFA_270923-compressed.pdf

Is your reference the article in The Australian yesterday?  The headline  ("EBOS shifts focus from jilted Greencross to Paragon Care") didn't really tally with the article... which describes several parties as potentially being interested in Paragon.  Paragon seems to attract these kind of rumours fairly frequently...

[Shareguy]

Yes only $15m NPAT FY23 so not a major. Hopefully another good little bolt on. There is still talk that Ebos are still working on a deal to buy the other half of animates they don't own from Greencross.

[Shareguy]

Is your reference the article in The Australian yesterday?  The headline  ("EBOS shifts focus from jilted Greencross to Paragon Care") didn't really tally with the article... which describes several parties as potentially being interested in Paragon.  Paragon seems to attract these kind of rumours fairly frequently...

Yes I see that there is reportedly multiple party's that have shown interest. Might all be just speculation.  Get your point re potentially. The Australian often seems to get the inside running on these deals , but yes just speculation.

[Waltzing]

whats the war chest ....  better check the last FA...

[Shareguy]

https://smallcaps.com.au/chemist-warehouse-sigma-healthcare-merger-asx-powerhouse/

Not good news for Ebos. If approved will be more competition for Ebos on acquisitions. Given the relationships surprised Ebos won the CW contract at all.

[KW]

https://smallcaps.com.au/chemist-warehouse-sigma-healthcare-merger-asx-powerhouse/

Not good news for Ebos. If approved will be more competition for Ebos on acquisitions. Given the relationships surprised Ebos won the CW contract at all.

There may be an upside for Ebos.
https://www.afr.com/companies/retail/sigma-could-shed-customers-after-chemist-warehouse-merger-20231212-p5eqt6

Chemist Warehouse's proposed listing with Sigma Healthcare, creating an $8.8 billion listed retail giant, will likely lead to a loss of independent pharmacies buying from the company's wholesaler business and could be blocked by competition regulators.

Jefferies analyst David Stanton told clients in a note that most pharmacies use two wholesalers. Should this deal complete, Dr Stanton pharmacists who use Sigma as a wholesaler could look elsewhere.

"Independent pharmacies may switch wholesalers at the end of contracts, and in the short term may favour a different pharmacy wholesaler," Dr Stanton said.

"We believe there is the potential for loss of independent pharmacists in the medium term who use SIG as a wholesaler, as these pharmacists may not wish to use a combined entity that is a potential retail threat to their business."