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Ebos takes 25% stake in Good Price Pharmacy Warehouse

Ebos takes 25% stake in pharmacy retailer, flags further acquisitions

By Suze Metherell

Aug. 27 (BusinessDesk) - Ebos Group, which trebled its annual profit after acquiring pharmaceutical wholesaler and distributor in Australia Symbion, has taken a quarter-stake in an Australian pharmacy retailer and is hunting for more.

The Christchurch-based healthcare and animal care manufacturer, which reported its full-year earnings today, said post-balance date it had secured a 25 percent stake in Good Price Pharmacy Warehouse, an Australian discount chemist retailer, for an undisclosed sum, which it says will add to 2015 year earnings. Outgoing managing director Mark Waller told BusinessDesk the company had more deals on the cards, without being more specific.

"We've looked at a heck of a lot in the last fiscal year despite the new big deal," Waller said. "We've got a work-in-progress on a number of opportunities, we turned down a lot already during the year that didn't cut the mustard for our criteria."

The $1.1 billion cash and scrip Symbion purchase in June 2013 was a game-changer for Ebos, more than tripling annual revenue in a deal that gave Symbion’s owner Zuellig Group a cornerstone 40 percent stake in the New Zealand business. Net profit jumped to $92.1 million, or 62.8 cents a share, in the year ended June 30, its first full year after the acquisition, from $28.2 million, or 46.8 cents, a year earlier, while sales soared 216 percent to $5.76 billion.

"We've really set a new benchmark there," Waller said. The company doesn't give forward guidance, but expects the market to grow "in low single digits, at about 3 percent".

Australia now makes up 78 percent of sales and 80 percent of pretax earnings for the group. Changes to the country's Pharmaceutical Benefits Scheme has seen the Australian government reduce the price of prescription medications, putting pressure on the drug retailing sector's margins. Waller said the PBS brings the country more in line with New Zealand's own Pharmac pricing model.

"We sit here in New Zealand and say, 'well big deal', we've already been through it and we're doing damn well despite all those changes," Waller said. "It's just a matter of adapting your model and growing your efficiencies."

Peter Davies is taking up the role as chief executive, while Waller will be elected as the board's chairman at next year's annual general meeting.

Shares of Ebos gained 1.6 percent to $9.60, and have slipped 2.6 percent this year while the benchmark NZX 50 Index rose 9.7 percent. The stock is rated a 'hold' based on the consensus of five analysts polled by Reuters, with a median price target of $10.29.


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