Vet services business Apiam Animal Health (ASX: AHX) has gone from a trot to a canter with its aggressive acquisition strategy aimed at doubling revenues to $300 million within two years, announcing agreements to purchase Victorian Equine Group (VEG) and Romsey Veterinary Surgery for a combined $13.75 million.
VEG will be the third high-performance equestrian clinic brought into Apiam's stable in the past year after the group purchased Scenic Rim Veterinary Services in Queensland for $16 million last July and Agnes Banks Equine Clinic in NSW for $4.7 million in December.
The Bendigo-based company has 20 acquisitions under its belt since listing in 2015, and has recently increased its acquisition finance facility by $20 million to around $38 million to keep up the pace. Apiam acquired eight clinics alone in the December half, which was double the number of clinics acquired in the entirety of FY21.
The latest purchases will be paid for with $9.8 million in cash and the issuing of $4 million worth of shares, along with the potential for an additional earnout of up to $1.2 million payable to VEG based on FY22 performance.
“We are pleased to announce these strategic acquisitions that further reflect our commitment to providing leading equine veterinary services while continuing our strategic regional expansion into fast-growth veterinary markets,” Apiam managing director Dr Chris Richards said.
“VEG will enable us to provide industry-leading surgical and specialist skills to the broad range of equine markets we service in Victoria. Apiam now have a leading specialist cornerstone equine clinic location in each major East Coast state for our local clinics to use for expert referral.
“Romsey Veterinary Surgery adds an important mixed animal location in the fast growth corridor between Melbourne and Bendigo. We are looking forward to welcoming both veterinary clinic teams on board”.
Apiam employs 150 veterinarians with expertise across the pig, dairy, feedlot, sheep, poultry, equine, and companion animal sectors, supported by an experienced administration, nursing, technical services and ancillary team.
Located in the Melbourne to Bendigo growth corridor, Romsey Veterinary Surgery is a mixed animal and equine clinic that predominantly services animals from nearby farms and has benefited from the growing equine presence in the region.
Romsey has 16 staff, including six veterinarians, and is forecast to bring in revenue of $3.3 million in FY22.
VEG, which employs 25 staff, including 12 veterinarians, is a significant provider of equine services, including surgical, diagnostics, reproduction and hospitalisation, and is considered amongst Australia’s market leaders for specialist surgical referral. It is projected that the business will take in revenue of $5.5 million in FY22.
It owns a specialist equine hospital based in Bendigo, which provides ambulatory services for racehorses, other performance horses and the equine pleasure market. It also has a base in the strategically important region of Goulburn Valley, next to Victoria’s central stud region.
The acquisition of VEG will allow Apiam to leverage its adjacent referral/feeder clinics, reducing the need for Apiam’s existing Victorian equine clinics to refer to third party equine specialists.
The deal for Romsey Veterinary Surgery is set to be completed on 1 June 2022, and the settlement for VEG is expected on 1 July 2022. As part of the arrangement, key employees have entered into minimum term employment agreements with appropriate engagement and restraint terms.
Shares in Apiam Animal Health (ASX: AHX) have increased by 6.8 per cent to $0.78 as of 11.35 am AEST on the back of the announcement.
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