Apiam expands dominant footprint in regional markets with major Queensland acquisition
Health & Biotech
Health & Biotech
The company continues to capitalise on rapid changes taking place in Australia’s regional growth corridors.
Animal health company Apiam (ASX:AHX) is back on the M&A trail – this time announcing a major push into Queensland with another strategic acquisition.
The acquisitions of three leading veterinary centres is expected to increase group revenues by $10m per year.
Apiam said it also expects to leverage additional cost synergies once each clinic is integrated onto the company’s national back-end systems network.
AHX shares rose following the announcement and the stock has consolidated near 90c – a gain of around 50% since the start of the year as investors back the company’s regional expansion strategy.
With its latest acquisition, Apiam is executing on a regional growth strategy that CEO Dr Chris Richards has clearly communicated to the market for more than 12 months.
The key markets Apiam serves are benefitting from a number of tailwinds in the wake of COVID-19, with strong population growth, rising property prices and increased rates of pet ownership in regional growth corridors across Australia’s eastern states.
With its latest acquisitions, Apiam will consolidate a strategic presence in south and central Queensland to complement its existing network in NSW and Victoria.
Commenting on the announcement, Richards said south-east Queensland represents an important market in the company’s regional expansion strategy.
“We are seeing strong growth potential in rural and regional Queensland, as populations grow rapidly, companion animal ownership accelerates and mixed animal opportunities increase,” Richards said.
“There are also many adjacent areas that are under serviced by veterinarians, providing further growth options.”
The company also plans to drive further growth opportunities through its new clinics by leveraging Apiam’s market-leading services such as Best Mates, its subscription-based companion animal program.
Savings in the areas of logistics, marketing and procurement are expected to have benefits within the first year of ownership, Apiam said.
Apiam will acquire the Samford Valley Veterinary Hospital, situated 25km outside of Brisbane, in a cash and share deal comprising 90% cash and 10% Apiam stock.
The company acquired Clermont Veterinary Surgery in central Queensland and the Knox Veterinary Clinic in the southern Tara region, both with 80% cash and 20% stock.
New shares issued as consideration will be subject to a minimum escrow period of 12 months.
The total consideration for all three clinics is $5.7m, which Apiam will finance from existing funds using its strong cash flows and extra balance sheet strength.
Via its existing facility with NAB, the company still has $19.9m of debt financing available to fund further acquisitions.
This article was developed in collaboration with Apiam, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.