Swedencare - Finding yet another building block

Announces the acquisition of Vetio to 21x LTM EBITDA LTM sales & EBITDA USD 38m & 8. 6m, respectively Could add ~17% to ‘22e pre-synergy EPS on first look Vetio in brief Late yesterday, Swedencare announced the acquisition of Vetio, a North American contract manufacturer and drug development business within animal health. The company is stated (by Swedencare) to be the leading company in its field in North America. It is posting LTM (June’20-May’21) sales of USD 37.

9m and an EBITDA margin of c. 23% for EBITDA of 8. 6m.

According to the company, after a facility expansion two years ago, Vetio now has a strong backlog and is in the final stages of completing yet another factory expansion in Florida, pointing towards a continuous strong growth runway. Significant synergy possibilities Historically, Swedencare has been clear that an acquisition of a company with significant production capabilities would be interesting. Tonight, Swedencare delivered on this ambition.

With the acquisition of Vetio, we see several strengths. Firstly, we are positive on the contract manufacturing space: it is a strong picks-and-shovels play to capitalise on the strong underlying market growth within animal health. Secondly, we believe that there should be significant room for synergies.

The obvious synergies are related to direct insourcing of Swedencare’s production. Furthermore, We believe that the acquisition could increase the company’s R&D possibilities as well as create new business opportunities through Vetio’s business relations. In addition, the acquisition was partly financed through bringing in Symrise AG as a minority owner, which could present interesting growth opportunities.

Transaction details The transaction is made at an EV/EBITDA LTM multiple of 21x. The total deal size is stated to be SEK 1543m, financed through SEK 400m in new debt, SEK 1,150m in a directed new share issue and ~SEK 19m in an issue in kind to the selling management. In total, the share issue.