Owners of Wesfarmers Ltd (ASX: WES) shares have been treated to a rising dividend and rising share price in recent times, as we can see on the chart below. It has been busy making bolt-on acquisitions in the healthcare space, and it may soon be making a move in a different industry.
Wesfarmers is already heavily in the consumer space, with names like Bunnings, Kmart, Target, Catch, Priceline and Officeworks.
Readers may have recently seen that Bunnings expanded its pet range, which increased its addressable market with households.
But, Wesfarmers may soon make a big move in the pet industry.
Takeover attempt for Greencross?
According to reporting by The Australian, Wesfarmers has reportedly hired investment bank Barrenjoey as it considers whether to attempt an acquisition of Greencross, which is the business behind Greencross Vets and retailer Petbarn. It also owns Animates and Habitat Pet Supplies.
It's reportedly not certain that Wesfarmers is going to launch an offer, with there supposedly being discussions several months ago. But, the inclusion of Barrenjoey suggests that it's becoming more serious.
It was suggested as a possibility that Wesfarmers could just acquire a stake or a minority interest, with TPG Capital remaining as a majority owner, or others having an interest. AustralianSuper and Healthcare of Ontario Pension Plan currently own 45% of the business. Those two investors bought into the company at a price that valued Greencross at $3.5 billion.
The Australian reported that TPG Capital is working with investment bank Jefferies to consider options for the company. UBS may also be helping TPG Capital consider a possible listing of the business.
Would this be helpful for Wesfarmers shares?
The Australian reported that "a number of experts" believe Greencross would fit well into the Wesfarmers portfolio, but a deal would depend on the price.
Greencross reportedly is the largest vet business in Australia, with over 160 clinics, which include general practices, specialty and emergency centres, pathology laboratories and crematoria, according to The Australian.
The retail side of the business has more than 230 stores, across Petbarn, City Farmers and Animates. There are also pet services like grooming, dog washing, obedience and pet adoption.
The Australian also reported that the vet clinics could "fit well" into the recently-created healthcare unit, there could be synergies on the pet retailing side of things, and Wesfarmers could help Greencross thanks to its logistics.
If the acquisition price were at least $3.5 billion, if not more, then it'd be a sizeable acquisition for Wesfarmers, but it's big enough to be able to fund that size of a deal.