Swedencare - Adding some vitamins to the Easter egg
Acquiring Rx Vitamins 2020 sales & adj. EBIT of SEK 74m & 23m 8. 8x LTM EBIT: adding 14% to PF ’21e EPS Rx Vitamins in brief Tonight, Swedencare announced the acquisition of Rx Vitamins (“Rx”). Founded in 1998 by Craig Kisciras, Rx is a supplier of nutritional formulation products to the vet clinic industry.
Its range includes products for e. g. cardiovascular, joint, kidney, liver and immune health.
Most of the US-based company’s sales are generated domestically, with c. 1/5th (ABGSCe) stemming from exports to mainly the UK & Asia. Although production is outsourced, all products are developed by the company’s Chief Medical Officer, Dr.
Robert J. Silver. Dr.
Silver is considered a KOL within the pet health industry, leading us to believe he is likely an important player from a sales standpoint. He will continue in his role after the acquisition, playing a part in product development for the whole Swedencare Group going forward. Continuing to add synergy possibilities As with all the acquisitions we have seen since the start of 2020, we see clear synergy potential.
On the sales side, we note that the company has clear cross-selling opportunities. Furthermore, we acknowledge that the company also gets access to an important KOL, which could be a valuable asset for the awareness-raising marketing of the ProDen PlaqueOff line going forward. We also see potential for synergies within logistics, with the possibility of consolidating warehouses with the company’s other US assets further down the line.
No M&A multiple inflation to be seen The company continues to surprise in terms of M&A multiples, and we maintain that Swedencare has a unique role to play in the pet products M&A landscape. The acquisition adds. c.
14% to EBIT & EPS on ‘21e PF numbers. The company paid c. SEK 200m (160m cash, 40m equity) for an EBIT multiple of 8.
8x.
