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PetIQ to acquire Perrigo Animal
Posted on Thursday, 09 May 2019 14:28
PetIQ is buying US-based manufacturer of pet health and wellness products Perrigo Animal Health from Perrigo Company for USD 185.00 million in cash.
The purchase price represents an adjusted earnings before interest, taxes, depreciation and amortisation multiple of 9x based on estimations for fiscal 2020.
PetIQ will fund the deal with USD 25.00 million of existing cash on hand, a USD 145.00 million term loan from Ares Capital Management, and its existing revolving credit facility with East West Bank.
Headquartered in Nebraska, Perrigo Animal is billed as a leading manufacturer and marketer of over-the-counter pet health and wellness products.
Its portfolio includes brands such as PetArmor, a fast-acting topical treatment that exterminates fleas, flea eggs and other parasites in dogs and cats for up to 30 days.
Through its SENTRY range, Perrigo Animal also provides behaviour correction spray and calming collars.
For the financial year ended 31st December 2018, Perrigo Company posted net sales of USD 4.73 billion, down from USD 4.95 billion in the preceding 12 months.
As a result of the deal, PetIQ will expand and diversify its portfolio, which already includes brands such as PetAction, Advecta and PetLock.
Cord Christensen, the chief executive of the buyer, said: “We believe this strategic transaction will create significant long-term value for all of our stakeholders as we further the execution of our Follow the Pets long-term strategy by combining our companies’ complementary branded pet health and wellness product offerings to create a larger and more diversified business.”
Through the transaction, PetIQ expects to save more than USD 3.00 million by 2020, and more than USD 5.00 million by 2021.
Based in Idaho, the acquiror provides a range of over-the-counter pet health and wellness products, supplies and prescription medication, among others, to retailers, groceries, pharmacies and e-commerce channels across the US.
In the fiscal year ended 31st December 2018, the group generated net sales of USD 528.61 million (FY 2017: USD 266.69 million).
PetIQ expects the deal to increase its earnings with immediate effect and produce cash tax savings of around USD 18.00 million on a present value basis.
Subject to the usual closing conditions and US antitrust approvals, the transaction is due to complete during the third quarter of 2019.
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