|Patterson CEO Scott Anderson|
Minnesota-based Patterson Companies ($PDCO) announced Monday that it is buying Animal Health International, a distributor, for $1.1 billion in cash. Patterson expects the addition to double the size of its veterinary unit.
During the 12 months ended in March, Animal Health International brought in revenues of $1.5 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) of $68 million, according to a press release announcing the deal. Patterson intends to finance the deal with a $1 billion unsecured term loan and a $500 million revolving line of credit, the company says.
Patterson has been expanding its veterinary division since 2013, when it acquired the U.K. distributor National Veterinary Services. Last quarter, Patterson reported that sales grew across all of its veterinary product categories, including equipment, consumables, and software support services.
"This acquisition is a key part of our previously disclosed strategic intent to take a broadened view of our markets and position our businesses to generate profitable growth and increase shareholder value," said CEO Scott Anderson in the release.
Patterson expects the acquisition to result in $20 million to $30 million in cost synergies over a three-year period, the company said in its statement. Patterson has also been exploring a sale of its medical business, retaining Bank of America to help in that endeavor. If that sale succeeds, the company will apply the proceeds towards reducing the debt it is taking on to complete the Animal Health International deal, according to the release.
- here's the press release