Dechra Pharmaceuticals buys Caledonian for NZD8.7m

Specialist veterinary pharmaceuticals group Dechra Pharmaceuticals announced the acquisition of Caledonian for NZD8.7m (£4.4m).

Established in 2010, Caledonian supplies a range of proprietary equine drugs to practices in New Zealand and Australia. Dechra said the company's range of drugs will enhance its existing portfolio, which includes Osphos, and will establish Dechra as a leading equine pharmaceutical supplier in both Australia and New Zealand.

In addition, the deal will enable Dechra to grow its market penetration of equine products in the Asian market.

Chief executive officer Ian Page said: "We are pleased to have acquired the trade and assets of Caledonian which will be integrated into our existing Australian and New Zealand (ANZ) businesses. This will enable Dechra to leverage its position in the ANZ equine market."

In the year to 30 June 2017, Caledonian generated revenue of NZD3.6m (£1.8m).

RBC Capital Markets said: "Manufacturing is all outsourced so there is little integration risk and the acquisition itself looks attractive on conventional multiples (EV/Sales of 2.4x and EV/EBIT of 8.8x) adding £0.5m of EBIT in a full year.

"We like these small, low-risk acquisitions Dechra can make that i) expand its geographic footprint, ii) diversify growth and iii) could lead to an acceleration in underlying growth rates through adding more ‘to the bag’ for Dechra (promoting more than one product in this field often has synergistic benefits for other product ranges).

At 0937 BST, the shares were up 0.5% to 2,220p.