Patterson Companies Announces Acquisition of Animal Health International, Inc.
Transformational Acquisition More Than Doubles the Size of
Patterson Veterinary Business
Potential Sale of Medical Business Also Planned by Patterson
Combination of Two Transactions Expected to Result in Repositioned
Company Focused on Dental and Veterinary Segments
ST. PAUL, Minn.--(BUSINESS WIRE)--
Patterson Companies, Inc. (Nasdaq:PDCO) today announced a definitive
agreement to acquire Animal Health International, a leading production
animal health distribution company in the United States. This
acquisition will more than double the size of Patterson's veterinary
business. The combined unit will offer a range of products and services
to customers in the United States, Canada and the United Kingdom.
Concurrently, Patterson Companies also announced the potential sale of
its medical rehabilitation business.
According to Scott P. Anderson, chairman and chief executive officer of
Patterson Companies, "This is a transformational move for Patterson
Companies. Acquiring Animal Health International firmly establishes
Patterson in the production animal health market, in addition to
building on our already strong presence in the companion pet market.
This acquisition is a key part of our previously disclosed strategic
intent to take a broadened view of our markets and position our
businesses to generate profitable growth and increase shareholder
value." The Boards of Directors of both companies unanimously approved
the transaction. The acquisition of Animal Health International is
expected to close following regulatory approval in the Company's fiscal
Under terms of the definitive agreement, Patterson Companies will
acquire all of Animal Health International's stock for approximately
$1.1 billion in cash. Animal Health International generated sales and
EBITDA of $1.5 billion and $68 million, respectively, during the 12
months ended March 2015. The purchase price reflects a 16x trailing
EBITDA multiple. Patterson Companies is financing the acquisition
through a combination of a $1 billion unsecured term loan and a $500
million unsecured cash flow revolving line of credit. The initial
interest rate under the credit agreement is expected to be LIBOR plus
200 basis points.
Patterson expects $20 million to $30 million of synergies to result from
the Animal Health International acquisition, to be realized over a
three-year period. The Company's debt to EBITDA ratio will rise to
approximately 3.5x immediately after the acquisition. Patterson intends
to apply the proceeds from the potential sale of its medical business to
reduce the Animal Health International acquisition debt. In the event
the medical business is sold, the Company expects the debt to EBITDA
ratio to be approximately 2.5x.
The acquisition of Animal Health International and the realization of
planned synergies, coupled with the potential divestiture of the medical
business, is expected to be neutral to fiscal year 2016 adjusted
earnings per share, excluding one-time transaction costs and
amortization. The Company anticipates the two transactions will lead to
higher adjusted earnings per share beginning in fiscal year 2017.
Patterson has retained BofA Merrill Lynch to explore the potential sale
of the medical business. Through the last 12 months ended January 2015,
sales and adjusted operating income of the medical segment were $468
million and $64 million, respectively. Management has determined that
this unit, while well positioned in the marketplace, is not a core part
of the Company's long-term growth strategy. "Today our medical business
is solid, with a strong product portfolio and a dedicated employee
group. We are confident that it will flourish under new ownership that
can focus on driving growth in the rehabilitation market," commented
Patterson believes that positioning the Company to focus on the dental
and veterinary markets provides an opportunity to build scale and
Anderson said, "We believe concentrating Patterson's resources and
management on growing our closely aligned dental and veterinary units -
both organically and through acquisitions - will enrich our ability to
maximize the return on the capital we invest."
Animal Health International's president and chief executive officer John
Adent, stated, "We are pleased to join forces with Patterson. For Animal
Health International, we now have greater access to capital from a
diversified company that can be used to fuel further future expansion.
We have long admired Patterson and how they have built their veterinary
business. We look forward to combining our two organizations into a
formidable competitor serving key animal health sectors."
John Adent will lead the combined veterinary business as president.
George Henriques, currently the head of Patterson Veterinary, will serve
as chief commercial officer. "Together they will form a management group
that is second to none in the animal health industry," said Anderson.
Advising Patterson on both the Animal Health International acquisition
and the potential medical business sales is BofA Merrill Lynch. Animal
Health International's advisor in the transaction is Piper Jaffray.
Patterson Companies will hold an investor conference call and webcast
today, Monday, May 4, 2015, at 11 a.m. ET (10 a.m. CT) to discuss this
announcement. To join the live call, U.S. and Canadian participants
should dial (888) 587-0615, with international callers dialing
719-325-2494; the conference ID# for the live call is 9133650. To access
the live webcast, investors can go to www.PattersonCompanies.com.
The conference call will be archived on Patterson's website. A call
replay will be available for two weeks; interested persons can dial
(888) 203-1112 and provide the conference ID 9133650, when prompted.
About Animal Health International, Inc.
Animal Health International, Inc. is the leading full-line animal health
products, services and technologies company in North America,
representing and distributing products for more than 1,000 manufacturers
in the areas of companion animal, equine, beef and dairy cattle, poultry
and swine. Animal Health International meets the needs of its customers
and suppliers with strategically located distribution points, more than
400 sales and customer service representatives, innovative technologies,
and the broadest offering in the industry. Animal Health International
has been serving the animal health community for more than 40 years by
providing its dealer, producer and veterinary customers quality
products, services and technologies at competitive prices, by partnering
with and supporting both leading and emerging manufacturer partners, and
by engaging and developing motivated and talented employees at all
levels. Animal Health International proudly gives back to the
communities we serve through the funding and support of education
initiatives, leadership on important industry topics, and by continued
support of youth in agriculture. For more information, please visit www.animalhealthinternational.com.
About Patterson Companies, Inc.
Patterson Companies, Inc. is a value-added distributor serving the
dental, companion-pet veterinarian and rehabilitation supply markets.
As Patterson's largest business, Patterson Dental
provides a virtually complete range of consumable dental products,
equipment and software, turnkey digital solutions and value-added
services to dentists and dental laboratories throughout North America.
Patterson Veterinary is a leading distributor in the
U.S. and U.K. of consumable veterinary supplies, equipment and software,
diagnostic products, vaccines and pharmaceuticals predominantly to
companion-pet veterinary clinics.
Patterson Medical is the world's leading distributor
of rehabilitation supplies and non-wheelchair assistive patient products
to the physical and occupational therapy markets. The unit's global
customer base includes hospitals, long-term care facilities, clinics and
This release contains forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are information of a non-historical nature and are subject to
risks and uncertainties that are beyond the Company's ability to
control. Any statements made in this press release about the Company's
future financial conditions, results of operations, expectations, plans,
or prospects constitute forward-looking statements. Forward-looking
statements also include those preceded or followed by the words
"anticipates," "believes," "could," "estimates," "expects," "intends,"
"may," "plans," "projects," "should," "targets" and/or similar
expressions. These forward-looking statements are based on the Company's
current estimates and assumptions and, as such, involve uncertainty and
risk. Forward-looking statements are not guarantees of future
performance, and actual results may differ materially from those
contemplated by the forward-looking statements because of a number of
factors, including the factors described in Item 1A of the Company's
most recent Annual Report on Form 10-K, which factors are incorporated
herein by reference. Any forward-looking statement in this release
speaks only as of the date in which it is made. Except to the extent
required under the federal securities laws, the Company does not intend
to update or revise the forward-looking statements.
Patterson Companies, Inc.
Ann B. Gugino, 651-686-1600
President & CFO
Source: Patterson Companies, Inc.
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