NZ's EBOS dumps $2.4 billion Greencross buyout on weak investor demand
By Scott Murdoch
SYDNEY (Reuters) -Australasian pharmaceutical distributor EBOS Group shelved a A$3.75 billion ($2.4 billion) deal to buy Australian vet chain Greencross on Wednesday after it faced weak demand from its investors to fund a major capital raising.
EBOS shares initially slumped by 7% following the announcement, as the deal was projected by investors to have been positive for future earnings. The stock recovered some lost ground and was off 3% in Australian trading and 4.8% in New Zealand by 0053 GMT.
EBOS did not name its takeover target in Wednesday's statement cancelling the deal, but two sources with direct knowledge of the matter said the company was in talks to acquire TPG Capital-backed pets and vets business Greencross.
EBOS was due to pay A$3.75 billion to acquire the Sydney-based Greencross, and was set to raise about A$2 billion as early as Wednesday, said one of the sources who could not be named discussing confidential information.
The EBOS stock was due to be sold at a 12% discount, the source added. EBOS, which is listed in New Zealand and Australia, has a NZ$7.4 billion market capitalisation, meaning a capital raising of the planned size would have been highly dilutive to its investors.
The capital raising and associated buyout was put on hold because of weaker than expected demand from EBOS investors, the second source said.
Macquarie Group and UBS were due to undewrite the capital raising ahead of it being pulled, the sources said. Both banks did not respond to a request for comment from Reuters.
TPG declined to comment on the failed transaction and Greencross did not respond to a request for comment.
Greencross operates 160 vet clinics in Australia and 230 retail stores, operating as Petbarn and City Farmers in Australia and Animates in New Zealand, according to the company's LinkedIn page.
U.S. private equity TPG bought Greencross in 2019 and delisted it from the ASX in a deal worth A$669 million.
Shelving the deal extends a recent run of big ticket transactions in Australia put on hold, led by Albemarle dumping its $4.2 billion bid for Liontown Resources .
In a New Zealand stock exchange announcement, EBOS said it had recently been "engaged in discussions regarding a potential strategic transaction related to its Animal Care segment".
"These discussions have now concluded and a transaction will not proceed."
($1 = 1.5366 Australian dollars)
(Reporting by Scott Murdoch in Sydney; Additional reporting Ayushman Ojha in Bengaluru; Editing by Stephen Coates)
