Friday 19th October 2018
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Ebos Group will pay A$50 million to tighten its grip on its Australian retail pharmacy network.
The healthcare and animal health products maker has agreed to buy out Terry White, two years after securing a controlling stake when the Australian pharmacy business merged with Ebos's Chemmart business. The deal will be done via a scheme of arrangement and is expected to be completed before the end of the calendar year.
The merged TerryWhiteChemmart entity is already one of Australia's biggest retail pharmacy networks. At the time of the merger, annual retail turnover was A$2 billion across 500 pharmacies. Ebos said full ownership is expected to increase earnings in the year ending June.
"A strongly resourced management company is critical in the face of a highly competitive and evolving retail pharmacy sector and continuing industry reforms," chief executive John Cullity said.
Last month, TerryWhiteChemmart chief executive Anthony White told the Australian Financial Review a float was still an option for the company but wouldn't be on the cards in the immediate future as the integration of the business continued. He said the pharmacy retailer aimed to have more than 1,000 stores in the network by 2020, with a 25 percent market share.
Ebos shares slipped 0.2 percent to $21.75 at the opening of the market on a very small volume. That was a smaller decline than the wider S&P/NZX 50 index.
The company's greater control over the retail pharmacy business will come into effect ahead of a A$1 billion annual distribution deal with Australia's Chemist Warehouse from July.
Ebos has a successful track record of mergers and acquisitions and transformed itself in 2013 with the purchase of Australian pharmaceutical wholesaler and distributor Symbion. About 48 percent of gross operating revenue is derived from the wholesale and retail pharmacy businesses.
However, Cullity warned shareholders this week that the Australian Federal government's pharmaceutical benefits scheme to subsidise prescription drugs for residents threatens a model that works well.
Ebos's cornerstone shareholder Zuellig Group also holds a third of Greencross Medical, which has a retail pharmacy network of 357 stores in New Zealand under the Unichem and Life Pharmacy brands.
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