Ebos eyes Australian retail pharmacy with Terry White deal

Thursday 4th August 2016

Ebos Group plans to beef up its Australian retail pharmacy exposure selling its 270-store Chemmart business to Terry White Group and taking a 50 percent stake in the enlarged pharmacy chain.

The deal is subject to several conditions including Terry White Group shareholder approval and is expected to be wrapped up in late October, Christchurch-based Ebos said in a statement. Once completed, Terry White Group's retail network will expand to 500 and its financial statements will be consolidated into Ebos's accounts. The New Zealand company will receive shares for the sale of Chemmart's assets and inject an undisclosed amount of new capital to lift its stake to 50 percent, with chief executive Patrick Davies taking a seat on the board.

Ebos said the expected earnings impact isn't material with retail pharmacy accounting for about 6 percent of its gross operating revenue.

"The pharmacy industry is positioned for growth with Australia's ageing population and positive community attitudes towards health and wellbeing," Davies said. "This merger is about capitalising on those strengths and continuing to develop competitive and sustainable businesses for pharmacy owners while also significantly increasing our ability to meet the evolving needs of our customers."

Earlier this year, Davies said Ebos's businesses were spitting out enough cash to allow for more acquisitions while meeting its policy of paying 60-to-70 percent of net profit in dividends. The company transformed itself in 2013 with the purchase of Australian pharmaceutical wholesaler and distributor Symbion, and has since bought New Zealand vitamin and herbal tea maker Red Seal, pharmaceuticals firm Zest, Australian pharmacy retailer Good Price Pharmacy Warehouse and the BlackHawk Premium Pet Care pet food business.

Brisbane-headquartered Terry White Group reported a profit of A$1.5 million from continuing operations on a 44 percent increase in revenue to A$32.9 million in the six months ended Dec. 31. It told shareholders in the unlisted company it expected annual earnings before interest, tax, depreciation and amortisaton to be "significantly higher" than the A$3.7 million posted in 2015 and was "committed to the expansion of the network and would continue to explore growth opportunities in 2016 and beyond".

In a separate statement, Terry White Group said shareholders will vote on the proposal at special meeting next month.

Terry White Group chief executive Andrew White will lead the enlarged franchise management entity with Ebos's Chemmart executive director Duncan Phillips taking the role of chief operating officer.

Terry White Group chairman Terry White recommended the deal to shareholders saying the board will be voting in favour of the transaction.

Ebos shares were unchanged at $16.50, and have gained 20 percent this year.

BusinessDesk.co.nz

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