Apiam Expands Dominant Presence in Regional Markets with Major Acquisition in Queensland
The company continues to capitalize on the rapid changes taking place in Australia’s regional growth corridors.
Animal health company Apiam (ASX: AHX) is back on the mergers and acquisitions trail – this time announcing a major push in Queensland with another strategic acquisition.
The acquisitions of three leading veterinary centers are expected to increase the group’s revenues by $ 10 million per year.
Apiam said he also expects to take advantage of additional cost synergies once each clinic is integrated into the company’s nationwide network of back-end systems.
AHX shares rose after the announcement and the stock consolidated at nearly 90c – a gain of around 50% since the start of the year, with investors backing the company’s regional expansion strategy.
With its latest acquisition, Apiam is implementing a regional growth strategy that CEO Dr Chris Richards has clearly communicated to the market for over 12 months.
Major markets served by Apiam are enjoying a number of favorable winds in the aftermath of COVID-19, with strong population growth, rising house prices and rising pet ownership rates in the regional growth corridors of the eastern states of Australia.
With its latest acquisitions, Apiam will consolidate a strategic presence in South and Central Queensland to complement its existing network in New South Wales and Victoria.
Commenting on the announcement, Richards said South East Queensland was an important market in the company’s regional expansion strategy.
“We are seeing strong growth potential in rural and regional Queensland as populations grow rapidly, pet ownership accelerates and the possibilities of mixed animals increase,” said Richards.
“Many adjacent areas are underserved by vets, which offers other options for growth.
The company also plans to generate new growth opportunities through its new clinics by leveraging Apiam’s industry-leading services such as Best Mates, its subscription-based pets program.
Savings in logistics, marketing and purchasing should pay off in the first year of ownership, Apiam said.
Apiam will acquire Samford Valley Veterinary Hospital, located 25 km outside Brisbane, in a cash and equity deal comprising 90% cash and 10% Apiam shares.
The company acquired Clermont Veterinary Surgery in central Queensland and the Knox Veterinary Clinic in the southern Tara region, both with 80% cash and 20% shares.
The new shares issued in consideration will be subject to a minimum period of sequestration of 12 months.
The total consideration for the three clinics is $ 5.7 million, which Apiam will fund from existing funds using its strong cash flow and additional balance sheet strength.
Through its existing facility with NAB, the company still has $ 19.9 million in debt financing to fund further acquisitions.
This article was developed in collaboration with Apiam, a Stockhead advertiser at the time of publication.
This article does not constitute advice on financial products. You should consider getting independent advice before making any financial decisions.