The InvoCare Limited (ASX: IVC) share price will be on watch on Thursday following the release of an announcement after the market close.
What did InvoCare announce?
This afternoon the funerals company announced that it has entered into conditional sales agreements to acquire 100% of the shares of Family Pet Care and the business and assets of Pets in Peace.
InvoCare has agreed a combined price of $49.8 million, of which $11.5 million represents deferred consideration subject to the attainment of 2-year earnings targets.
Management notes that the two acquisitions will provide InvoCare a national footprint and position it as the market leader in pet cremation and pet after life services in Australia.
They also represent a strategic expansion of the company's existing pet cremation business in NSW (Patch and Purr), putting it in a position to capture a larger slice of an industry estimated to be growing at ~9% per annum.
The acquisitions are forecast to deliver combined annual revenue of ~$19.3 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $5.2 million. Management also expects the acquisitions to be earnings per share accretive in the first full year of operations.
"High-quality businesses."
InvoCare's Chief Executive Officer, Martin Earp, appeared to be very pleased to be able to acquire these high-quality businesses.
He said: "The acquisitions are a significant expansion into the adjacent market of pet cremations building on our 2018 entry into this market in NSW and transforming the Pet Cremation division of InvoCare into a meaningful contributor to overall earnings. We are excited to complete these transactions as they are both very high-quality businesses providing exceptional levels of customer service."
Mr Earp sees the expansion of this side of the business as a natural evolution for the funerals company.
The chief executive commented: "Expanding the pet cremation business is a natural evolution for InvoCare providing opportunities to leverage its decades of operating in the end of life market. In addition, it is our belief that our deep experience in memorialisation in our core business will transfer across to the pet sector given the increasing trend towards the humanisation of the pet industry."
"I am also delighted to announce that the current owners and leadership teams of both businesses will remain in place to ensure that we continue to provide the highest level of customer service and facilitate a smooth integration with InvoCare's existing pet cremation operation, Patch & Purr. This will include building on the market leading service proposition provided through Patch & Purr's technology and bespoke cremations," he concluded.
