Ebos buys Aussie firm Symbion

EBOS Chairman Rick Christie (left) and Managing Director Mark Waller
EBOS Chairman Rick Christie (left) and Managing Director Mark Waller

Christchurch-based Ebos Group is looking for an ASX listing across the Tasman as part of a $1.1 billion deal to buy Australian pharmaceutical wholesaler and distributor Symbion.

New Zealand brokers are positive about the purchase, which will drive Ebos' revenues to more than $6b. In February, Ebos expected full-year revenues to be about $1.5b.

Ebos has an agreement to acquire Symbion from Zuellig Healthcare Holdings Australia.

There had been five months of due diligence from both parties, Ebos managing director Mark Waller said.

The deal would see Ebos become the third-largest New Zealand-listed company by revenue, behind Fonterra and Fletcher Building, he said.

Ebos would move from about $525 million capitalisation to about $1.25b.

In total "enterprise value", including debt, the company would grow from nearly $600m to about $1.7b.

For the acquisition, Ebos would pay $367m in cash and had agreed with institutions to place $90m of shares, Waller said.

There would also be a $149m renounceable rights issue to Ebos shareholders, with the remainder of the purchase price, $498m, being through the issue of new shares to Zuellig.

Zuellig would become a 40 per cent shareholder in the enlarged group.

Ebos would assume $230m of debt.

Ebos shares had been halted for a bookbuild, with the company having been on a roadshow to institutions to cement the $90m raising, Waller said.

Shares, which last traded at $9.90, would probably remain on a halt today, he said.

Hamilton Hindin Greene broker Grant Williamson said that given the size of Ebos, Symbion was "a huge acquisition", but Ebos had a good track record of bedding down such deals.

"Reading what has been said ... it has a strong record of growth and profitability. It should fit very nicely with Ebos," he said.

Craigs Investment Partners investment adviser Jennifer Moreton said the purchase looked like a good buy, with good synergies between what Ebos did in New Zealand and what Symbion did in Australia.

"We have a lot of faith in the management of Ebos because they have had a history of running that company well," she said.

She did not thing the Zuelling team would have agreed to the sale without an Australian listing, given the issue of Ebos shares.

She noted the company had hit a record intraday trading high of $10.01 on May 23.

The agreement is subject to conditions, including Ebos shareholder approval at a special meeting in Christchurch on June 14.

Ebos' last significant purchase was $105m paid for the trans-Tasman Masterpet group.

"Symbion has a strong record of growth and profitability ... has a diversified earnings stream in pharmacy, hospital and animal care, and is a great fit with Ebos' core business competencies in both countries," Waller said.

"On the animal-care side, Symbion's veterinary business, Lyppard, will sit well alongside our recent acquisition of Masterpet."

The two businesses were well matched, he said, with an 89 per cent "degree of fit" in what the two companies did and no geographic overlap in the markets they operated in.

Waller said that given the purchase, he would spend significant time in Australia, and was not ruling out further acquisitions by Ebos. "We've got a backlog of other opportunities, that's all I can say."

Ebos would seek a dual listing by December 31, and this would help with a natural appetite for shares, Waller said.

"When we did this placement we did a roadshow to Australia and the placement was heavily over-subscribed," he said.

Symbion chief executive Patrick Davies said Symbion's family-based owners would retain a significant investment in Ebos after the acquisition.