VCA CEO Bob Antin
A couple of weeks ago, VCA ($WOOF) said that it would buy an 80% stake in Las Vegas-based veterinary hospital chain Companion Animal Practices North America (CAPNA). Now the company is charging ahead with those plans, signing a definitive agreement to move forward with the deal.
Los Angeles-based VCA will shell out $344 million for CAPNA, which oversees 56 animal hospitals. "We have known and worked with CAPNA's management and many of its veterinary owners for years," VCA CEO Bob Antin said in a statement. "We clearly share the belief that we can make a difference in the veterinary profession." The companies expect to close the deal between April and July 2016.
Under the terms of the agreement, CAPNA will keep its management team and operate independently. VCA will lend its financial know-how to the vet hospital chain. "We have confidence in this model which is very similar to our Canadian business, which operates under an independent management that takes advantage of VCA's expertise and infrastructure," Antin said.
VCA is expecting big things from the deal. CAPNA will have annual revenues of $200 million this year. If all goes to plan and the deal closes during the second quarter, VCA expects the deal to tack on $0.03 to $0.14 to its 2016 non-GAAP adjusted diluted earnings per share excluding amortization, transaction and integration costs, the company said.
The agreement also comes with tax perks. VCA thinks the agreements will bring $116 million in future tax benefits, which will "positively impact" its cash flow over the next 15 years, the company said.
VCA is no stranger to dealmaking. Last March, the company's Antech Diagnostics division said that it would snatch up assets in Abaxis' ($ABAX) Veterinary Reference Laboratory for $21 million in cash. The companies planned to market a service that includes point-of-care diagnostic products, a fast-growing area in testing.
"We see great benefit in the relationship between two demonstrated leaders in veterinary diagnostics and this only strengthens the respective sales and marketing capabilities of Antech Diagnostics and Abaxis," Josh Drake, Antech's president, said at the time of the deal.
- here's the statement