NZ healthcare and pet food group EBOS seems to have ruled itself out of any role in the restructuring of the highly protected Australian pharmacy sector that emerged in late November when Woolworths overbid Wesfarmers for control of Australian Pharmaceutical Industries (API).
EBOS is a major Australasian player in the pharmacy and pharmaceutical products businesses with a number of Australian and NZ chemist chains, as well as the large Symbion distribution operation.
On Thursday EBOS revealed that it was buying medical devices business Lifehealthcare for $1.167 billion, and is asking shareholders to meet $742 million of that cost with a fund raising.
That’s about the size of the cost of a bid for API and more than the other listed player, Sigma Healthcare might sell for after its recent 2022 earnings downgrade.
Including debt, Lifehealthcare is valued at $1.275 billion. The vendor is Pacific Equity Partners, a local private equity group.
EBOS said in a statement on Thursday morning that “LifeHealthcare is one of the largest independent distributors of third-party medical devices, consumables and capital equipment, and inhouse manufactured allograft material in Australia, New Zealand and South East Asia.”
Christchurch-based EBOS, which is listed on the New Zealand and Australian stock exchanges, said the acquisition would create the region’s leading medical device distribution company and add to its Symbian pharmaceutical and other products businesses.
It will fund the acquisition with the $742 million from issuing new shares, $540 million of term loans and EBOS shares valued at $23 million issued to LifeHealthcare management.
Under the deal, EBOS will buy 100% of LifeHealthcare’s New Zealand and Australian units and 51% of its Asian unit, Transmedic, which operates in Southeast Asia.
EBOS said it expects the acquisition to add $110 million to $114 million to operating earnings in 2022 and provide it with new options for business growth.
Shares in the $642 million placement component of the equity raising would be issued at $NZ34.50 each, a 5.5% discount to Wednesday’s closing price on the NZX.
A retail offer aiming to raise $110 million will start later this month.
Singapore-based EBOS shareholder Sybos Holdings has committed to subscribe for its 20% pro rata equivalent share of the equity raising.
EBOS shares were suspended to allow the placement to go ahead.
