Ebos Offers $700 Million for Symbion to Grow in Australia

Ebos Group Ltd., New Zealand’s only national pharmaceutical wholesaler, agreed to buy Australia’s Symbion Ltd. for NZ$865 million ($700 million) to expand in a market growing about 5.3 percent annually.

Ebos will pay NZ$367 million in cash and sell NZ$498 million of shares to Zuellig Group Inc., Symbion’s owner, the Christchurch-based company said in a statement. Ebos will also assume NZ$230 million of net debt in Symbion, the Melbourne-based owner of the Chemmart pharmacy and Faulding drug brands.

The deal, slated for completion July 5, will give Zuellig a 40 percent stake in the enlarged company, which Ebos predicts will have annual sales of NZ$6.3 billion. That will make it the third-largest New Zealand company. Ebos shares will trade in Australia, where health-care spending was A$130 billion ($124 billion) in 2011, up from A$77.5 billion a decade earlier.

“We are bringing together two businesses that are very well matched geographically and operationally, and are leaders in their segments in their respective markets,” Ebos Managing Director Mark Waller said in the statement.

Ebos shares rose 1.5 percent to NZ$10.05 at the 5 p.m. market close in Wellington. The stock has climbed 21 percent this year, double the 10 percent advance of New Zealand’s benchmark stock index. Ebos is seeking to list its shares on the Australian stock exchange this year, it said.

The offer price is about 15 percent below the mid-point of an evaluation range made by independent adviser Northington Partners, which said the price is attractive for Ebos, according to the statement.

Rights Offer

Ebos completed an institutional share placement to raise NZ$90 million today. The equity raising, at a price of NZ$8.50 a share, was underwritten and managed by Forsyth Barr Group Ltd. and UBS New Zealand Ltd. A 7-for-20 rights offer at NZ$6.50 will follow.

The deal “should not change the competitive landscape for pharmaceutical wholesaling in Australia, given the rationality of the market place has been progressively improving over the last two-to-three years,” said Matthew Prior, an analyst at Bank of America Merrill Lynch in Melbourne, in an e-mailed response to questions.

Including debt, the transaction values Symbion at about NZ$1.1 billion, according to the statement. That’s a ratio of 7.9 times its forecast 2013 earnings before interest, tax, depreciation and amortization, according to Northington Partners.

By comparison, Melbourne-based rival Sigma Pharmaceuticals Ltd. trades at 10.3 times ebitda, and Australian Pharmaceutical Industries Ltd. trades at 5.8 times, the adviser said.

The transaction is subject to approval by shareholders voting at a special meeting in Christchurch on June 14. Shareholders will also be asked to approve the appointment of two Zuellig nominated directors, Peter Williams and Stuart McGregor, to the Ebos board.

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