Tuesday 25th October 2011
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Pharmaceuticals and medical supplies distributor Ebos Group is currently evaluating a New Zealand/Australian-‘centric’ acquisition valued at more than $90 million, managing director Mark Waller confirmed.
The move follows the company's decision to back off an acquisition in Britain because of deteriorating market conditions in Europe but is currently evaluating another “significant” Australasian purchase.
Waller confirmed the British business, currently owned by a private equity firm, would have cost in the region of $80 million to $90 million and that the Australasian opportunity is worth more than that.
Ebos had spent seven months working on the potential British acquisition but in the end decided it was too big a risk in the current environment, Waller said.
Potential acquisitions were discussed at Ebos' annual shareholders' meeting last Thursday when Waller said he expects many multinational healthcare companies “will be forced to exit their expensive Australian subsidiaries,” creating opportunities for Ebos.
However, Waller's speech and that of chairman Rick Christie weren't posted on the NZX until Tuesday.
The dollar size of the potential British and New Zealand/Australian acquisitions were reported by www.stuff.co.nz last Friday, but this information wasn't in the speeches posted by the NZX.
Section 10 of the NZX listing rules requires all listed companies to release “any material information” to the NZX first before telling any other parties. Waller said he hadn't regarded the information as material.
Christie's speech said Ebos had nearly $100 million in cash at June 30 and insignificant debt.
He said business conditions “remain competitive and rugged.”
“Intuitively, one would think that in tough economic times, there would be any number of distressed companies out there just waiting for new owners to inject new capital and new life into them,” Christie said.
While Ebos has looked at a number of such companies, it doesn't want to buy something it would take years and millions of dollars to put on a sound footing, he said.
Ebos' last significant acquisition was in 2007 when it paid $86.3 million for pharmaceuticals wholesaler PRNZ, which more than doubled its size.
The company had been cashed up and looking for acquisitions for about nine months before it announced the PRNZ purchase. The company has been talking about finding another significant acquisition for more than a year.
Ebos shares are 4 cents higher at $6.60, up from their $6.30 low in August but well down from the 12 month high at $7.80 in December last year.
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