Special Report: Pet ownership rates continue to increase across regional markets where Apiam has a strong foothold.

Animal health company Apiam (ASX:AHX) got back on the acquisition trail this morning with a new deal in NSW.

The company announced it will acquire Don Crosby Veterinary Surgeons, a privately-owned vet practice situated in the regional centre of Dubbo.

Consideration for the deal is $5m, comprising 70 per cent cash and 30 per cent scrip which values the new practice at around 1.4x FY20 revenues.

It marks a continuation of Apiam’s strategy to build out its presence in key regional markets, amid the dual tailwinds of increased pet ownership rates and rising populations.

Market opportunity

Discussing the rationale for the acquisition, Apiam CEO Dr Chris Richards said Dubbo was a particularly attractive location, given its position as a regional transport hub.

“As with other growing regional locations, companion and equine animal ownership attitudes have increasingly aligned with metro attitudes in recent years, and veterinary spend in this area has increased commensurately,” the company said.

Established in 2002 by Dr Don Crosby, Apiam’s new practice has built a successful track record serving predominantly companion animal and equine clients in the Dubbo area.

As a measure of the company’s ability to scale, the Don Crosby team now employs six veterinarian staff and generated $3.6m of revenue in the 2020 financial year.

“In this current environment, where companion animal spend is experiencing a strong underlying growth trajectory, we see significant opportunity to bolster our presence in this region and we welcome the Don Crosby Veterinary Surgeon’s team on board,” Richards said.

The acquisition will complement Apiam’s existing presence in the Dubbo market, where it already owns a smaller practice.

The 70pc cash / 30pc scrip weighting is in line with Apiam’s previous acquisitions, and leaves the company with “significant headroom remaining to fund future growth”, the company said.

And with its long-term capital investment program now translating into material top-line revenue growth, Apiam is ideally positioned to capitalise on its growing regional footprint to drive long term profits.

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.