In an offer too good to refuse, owners of privately-held veterinary company Grampians Animal Health have sold the business to Apiam Animal Health (ASX: AHX) for $4.65m.
Located in Hamilton, Victoria – the heartland of Victorian sheep farming – the purchase will see Apiam acquire the animal veterinary clinic as well as Livestock Logic, a respected animal production consultancy business which operates throughout Victoria, New South Wales and South Australia.
Between the two businesses, Grampian Animal Health generated $4.1m revenue in FY19 which would have the acquisition price slightly higher than industry averages, but reflective of the Livestock Logic’s growth opportunity once integrated into the Apiam Group.
“The acquisition of GAH will significantly enhance Apiam’s operations in the Western District of Victoria and leverage our asset base and infrastructure in this region,” said Apiam Managing Director, Dr Chris Richards.
“This is a fundamental pillar of our regional expansion strategy, and will take our South West Victorian operating region to 7 clinics.
“GAH also offers Apiam new skills and expertise in sheep consulting services and parasitology diagnostics that can be further expanded through our extensive network of production animal veterinarians in other regions of Australia.”
Terms of the acquisition will see owners of GAH accept 70% of the purchase price in cash and 30% in AHX shares with half of the shares issued to be held in escrow for 12 months, and the other half, 24 months. There is also a deferred consideration component of $300,000 subject to business performance.
Since listing on the ASX in 2016, Apiam Animal Health has grown its national footprint to operate in 42 locations around Australia through a mix of its veterinary services, product sales and laboratory services.
In FY19, Apiam Animal Health reported revenues of $111.7m, a rise of 4.8% from FY18 but of greater note was the increase of 48.4% on gross margins highlighting the actualisation of Group synergy from its acquisitions.