Ebos buys Aussie firm Symbion

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 were positive about the purchase which will drive Ebos' revenues to in excess of $6b. In February Ebos expected full year revenues to be in the order of $1.5b.

Ebos has entered into an agreement to acquire Symbion from Zuellig Healthcare Holdings Australia. There had been five months of due diligence from both parties involved in the transaction, Ebos managing director Mark Waller said.

Once the transaction is completed it will see Ebos become the third largest New Zealand listed company by revenue, behind only Fonterra and Fletcher Building, he said.

In terms of capitalisation, Ebos would move from around $525 million to around $1.25b.

In terms of total ''enterprise value'' including debt, the company would grow from nearly $600m to around $1.7b.

For the acquisition Ebos will pay $367m of 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 will become a 40 per cent shareholder in the enlarged group.

In addition, Ebos will assume $230m of debt, when combined with the purchase consideration added to a $1.1b enterprise value.

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

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

Hamilton Hindin Greene broker Grant Williamson said 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.''

Craigs Investment Partners investment advisor Jennifer Moreton said the purchase looked like a good buy, with good synergies between what Ebos did here 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,'' Moreton said.

In terms of the ASX-listing 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 certain conditions including Ebos shareholder approval at a special meeting in Christchurch on June 14, and settle early in July.

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. On the animal care side,

Symbion's veterinary business Lyppard will sit well alongside our recent acquisition of Masterpet,'' Waller said.

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

Waller said 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.''

It 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 oversubscribed.''

Symbion chief executive Patrick Davies said a key indicator of the upside potential was the decision by Symbion's family-based owners to retain a significant investment in Ebos post the acquisition.

The Press