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EBOS cancels $3.75 billion Greencross purchase in surprise twist

Business media and market chatter had the New Zealand pharmaceutical and animal products giant, EBOS (ASX:EBO), poised to finalise a $3.75 billion acquisition of the Greencross animal care group.

The Financial Review boldly stated, “Trans-Tasman pharma distributor EBOS will pay $3.75 billion to acquire TPG Capital-backed pets and vets business Greencross, details of which were first revealed by this column last week.”

However, at 9:28 am on Wednesday, the deal was abruptly called off, with EBOS issuing a concise statement: “EBOS Group Limited (EBOS) advises that it has recently concluded discussions regarding a potential strategic transaction related to its Animal Care segment. These discussions will not proceed.”

Despite this unexpected turn of events, EBOS remained optimistic in its trading update, announcing a promising start to the FY24 financial year, with strong growth continuing following the Annual Meeting.

EBOS reported year-to-date growth for the four months ending on October 31, 2023, which showed underlying revenue up 8.2% and EBITDA up 8.8%.

Media and market reports hinted at ongoing negotiations between the company and potential partners, including Greencross owner TPG, the US private equity group, AustralianSuper, and Canadian investor HOPP, with the possibility of a deal being released in the coming days.

It was also suggested that EBOS might undertake a $2 billion equity raising at a 12% discount to the last sale price of $35.01, as the company seeks a major new revenue source following the expiration of its $2 billion-a-year supply deal with Chemist Warehouse next June.

Greencross, known for its chain of veterinary clinics and the Petbarn retail chain, reported a revenue of $1.6 billion in the year ending in June, which, at less than half the proposed purchase price, represents a significant deal for the vendors, according to the AFR.

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