- M&A
- June 3, 2023
- 3 minutes read
PE Firm EQT To Buy Veterinary Drugmaker Dechra For $6B
The latest big leveraged buyout is coming from the U.K. EQT Partners, a Swedish private equity firm, has struck a…
The latest big leveraged buyout is coming from the U.K. EQT Partners, a Swedish private equity firm, has struck a deal to acquire Dechra Pharmaceuticals (LON: DPH), a London-listed manufacturer of veterinary drugs.
EQT will pay 3,875 pounds in cash for each Dechra share, valuing the company at £4.5bn ($5.6bn) on a fully diluted basis and at £4.9bn ($6.1bn) including debt. The bid represents a 44% premium to Dechra’s share price before EQT announced its intention to acquire the company.
- Dechra Pharmaceuticals reported £682mn ($850mn) in revenue and a £174mn ($217mn) operating profit in its last fiscal year ended June 2022. EQT is paying about 21 times Dechra’s annual operating profits, a healthy multiple for an acquisition.
- Dechra was founded in 1997 as a management buyout of three subsidiaries from the Lloyds Chemists Group, a British pharmacy firm. Dechra manufactures high-margin prescription-only medicines for dogs, cats, and horses. It sold its lower-margin veterinary services business in 2013 to focus on the more profitable drugmaking business.
Private equity firms like EQT Partners are increasingly looking towards London-listed companies as acquisition targets. These companies trade at comparably lower multiples than their U.S. peers.
EQT originally offered a higher price (4,070 pounds per share) for Dechra but reduced its bid after the company issued a profit warning. It returned with the lower offer that Dechra’s board has accepted. This is a leveraged buyout funded by a group of creditors, including KKR, Permira, Blackstone, and CVC Capital Partners.
- EQT Partners is a long-time investor in the European veterinary sector. The Swedish private equity firm owns IVC Evidensia, a leading vet clinic chain, and minority stakes in pet food retailer ZooPlus and pet insurer ManyPets.
- This deal is contingent on a majority shareholder vote and a greenlight from antitrust authorities. Barring any obstacles, it’s expected to close later this year or early in 2024.
Correction: An earlier version of this article denominated the share prices in pence instead of pounds.
