Dechra Pharmaceuticals agrees on a £4 billion takeover deal by a Swedish private equity firm.
Swedish investment company EQT is set to take over veterinary drug producer Dechra Pharmaceuticals for £4.46 billion ($5.58B/€5.19B).
The substantial deal stands out during a time when company buyouts have been less frequent due to the recent economic uncertainty, marking the biggest takeover this year in Britain.
Dechra’s Chair, Elizabeth Alison Platt, comments on the offer, saying it was “a compelling opportunity for shareholders to realize, in cash and with certainty, Dechra’s potential for future value creation.”
The deal, which also gives Stockholm-based EQT a chance to expand its presence in the pet industry, is expected to be closed towards the end of 2023 or by the beginning of 2024. Completion remains dependent on shareholder approval.
After the announcement last Friday, Dechra’s share price jumped by 33%.
Less profit than expected
The pharma company issued a profit warning in May, saying its operating profits for 2023 would be below expectations of their February guidance at £186 million ($232.7M/€216M).
Various analysts admit that profit issues have arisen after American and British wholesalers cut back on the stock they hold.
This situation allowed EQT to receive a discount on what they were originally going to pay, but analysts at Jefferies predict that Dechra’s profit issues are “likely just temporary.”
“The price represents a 44% premium to Dechra’s closing share price on April 12—before EQT’s interest became public,” the Financial Times writes.
Pet portfolio is the main earner
Dechra operates globally, with 19 European countries making up 49% of its revenue.
The company recorded £681.8 million ($852.9M/€793.8M) in revenue in 2022, with its companion animals’ portfolio accounting for 74.6%. Other sectors Dechra highlighted were its dog and cat nutrition products, which comprise 5.1% of its total revenue.
According to its website, Dechra produces 40% of its products through the company’s own manufacturing sites, and the remainder is managed through external supply relationships.
EQT is a private equity firm that focuses on healthcare, technology services, and industrial technology as its primary sectors. Their current portfolio spans 57 companies and 145 investment advisory professionals.
The firm has recently increased its presence in the pet industry. In June 2021, the company bought into Bought By Many, a pet insurance company operating in Sweden, the UK, and the US.
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