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Zoetis to acquire Abaxis
Posted on Wednesday, 16 May 2018 13:07
Zoetis has reached an agreement to acquire veterinary point-of-care service provider Abaxis after three years of speculation regarding a tie up.
The New Jersey-headquartered acquiror will pay about USD 2.00 billion for the maker of diagnostic equipment for animal care needs.
Zoetis will fund the purchase through a combination of existing cash and new debt.
The addition of Abaxis will have an impact on 2018 reported earnings related to customary closing activities and will boost earnings in 2019.
Zoetis is expecting the transaction to enhance its presence in veterinary diagnostics, a category of the animal health industry with about 10.0 per cent compound annual growth over the last three years.
Under the terms of the deal, the suitor is offering USD 83.00 per share held in Abaxis, representing a premium of 15.7 per cent to the target’s close of USD 71.75 on 15th May, the last trading day prior to the announcement.
Stocks climbed 15.3 per cent to USD 82.75 at 07:36 in pre-market trading following the news today.
California-headquartered Abaxis claims to be a leading provider of diagnostic instruments and consumable discs, kits and cartridges to the animal health industry.
The company generated an 8.0 per cent increase in revenue to USD 244.70 million in the year to 31st March 2018 and its VetScan portfolio of benchtop and handheld equipment services a range of practices in North America and is expected to expand into new markets.
Juan Ramón Alaix, chief executive of Zoetis, said: “This acquisition brings Zoetis a company that has a proven, competitive diagnostic platform for growth that we can help to accelerate in the US and worldwide with our global scale and direct customer relationships in approximately 45 countries.”
The veterinary diagnostics category is expected to be worth more than USD 3.00 billion and the acqurior predicts it to continue to grow faster than the animal health industry, with a compound annual growth rate in the mid to high single digits.
Closing is subject to regulatory and shareholder approvals and is expected before the end of 2018.
Zoetis has annual revenues of USD 5.30 billion for 2017, 57.0 per cent of which is derived from farm animal products.
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