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National Veterinary Care share price up on acquisition news

The National Veterinary Care Ltd (ASX: NVL) share price has opened stronger today after the company announced the acquisition of two additional veterinary clinics to the ASX this morning before market open. National Veterinary Care shares closed at $2.45 last week but opened today at $2.49 and have since risen to $2.50 a share – a bump of 2.04%

What exactly did the company announce?

Namely, that it has entered into ‘binding agreements’ to acquire two veterinary clinics, one in Australia and one in New Zealand.

Here’s some of what National Veterinary Care had to say in its release:

The acquisitions are conditional on due diligence, board approval and lease assignments, with settlements expected to take place by 30 November 2019. The new clinics are in existing NVL geographic clusters.  The New Zealand clinic is a strategic acquisition for consolidation with a smaller Pet Doctors clinic to achieve a larger, more sustainable clinic.

The acquisitions are expected to deliver aggregate annual revenue of approximately AU$2.45 million and an aggregate annual EBIT of approximately $0.47 million. Total consideration for the acquisitions will be $1.94 million, with total upfront payments of $1.34 million and deferred components (partially subject to earnout conditions) of $0.6 million.

These two acquisitions will put the National Veterinary Care portfolio at 102 businesses across Australia and New Zealand. Although the pet business has been growing at a heathy rate over the past decade or two, the fate of former rival and Petbarn-owner Greencross Limited, which struggled for many years before being taken over by US-based TPG Capital earlier this year, serves as a reminder that diligence remains crucial to success.

Still, it seems as though National Veterinary Care has finally found a winning formula in the post-Greencross world – the company’s shares have surged nearly 30% this year alone, from a low of $1.58 in January, after falling from more than $3 in early 2018. If the company can continue to make quality acquisitions, it might be back up to $3 from here!

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of NATVETCARE FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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