Ebos chairman shrugs off a share price slide

By Chris Hutching

Friday 27th October 2000

Philip Burdon

Listed medical supplies company Ebos is in acquisition mode.

Chairman Philip Burdon highlighted the successful outcome of recent acquisitions such as Medic Corporation through the issue of shares that were valued at $3.50 at the time of the deal.

The price compares with the current price of $2.75. The 3.5 million shares worth $11.2 million were issued to Medic Corporation vendor Rangatira during the year ending June 2000. Soon after the deal was consummated Rangatira is understood to have sold about 800,000 at a price around $3.50 and a similar parcel was bought by funds manager Axa.

Mr Burdon said the fall in share price was the result of share price perceptions affecting smaller stocks on the Stock Exchange. "Our share price is still a good vehicle for acquisitions and shows our ability to outperform the market."

Another 7.7 million shares worth $10.5 million were issued in a rights issue during the year.

Ebos is n a growth phase with the acquisition of Wellington-based Medic Corporation whose head office and distribution warehouse will be sold and operations re-established in Auckland on a site adjacent to another recent acquisition, Auckland-based Health Support, which services hospitals such Carrington.

Managing director Mark Waller explained to shareholders at the annual meeting mid-week in Christchurch how Ebos was changing its strategic focus from being an agency to acquiring brands in its own right as well as expanding its other service activities.

This was because of the increasing number of mergers of international-brand suppliers, which might leave a company such as Ebos in a vulnerable position if those companies wished to change arrangements or take control of their own marketing. This was one of the reasons Ebos bought Health Support, which commands an important strategic position in servicing hospitals.

The first couple of months into the new financial year revealed Ebos was tracking last year's performance so far. Mr Waller said he preferred to be a little cautious about forecasts rather than oversell the stock because undershooting performance targets even slightly tended to invite a harsh reaction in the current market.

In recent years Ebos has received top accolades, notably in NBR/LEK surveys of wealth creation.

Prominent shareholders who bailed out of Ebos during the June 2000 year following a 2:1 share split included Eric Watson and Tim Glasson. But Ebos directors, Mr Waller and Maurice Ryan, chairman Philip Burdon and deputy chairman Peter Kraus bought more shares.

Brokers continue to rate Ebos a "buy," valuing the shares at more than $4, based on forecasts of a $5.2 million after profit for the current year to June 2001 and $6.8 million the following year.

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