Swedencare - Doing its christmas shopping online

Acquires Holden2, 4th large acquisition since June Adds 30% to sales, 15% to EBITDA & 10% to EPS ‘21e LTM Sales SEK 149m (EV/S 1. 3x), EBITDA 24m (8x) Holden2 in Brief Today, Swedencare announced the acquisition of Holden2. Founded in 2011, the company is an online retailer specialised in the Amazon and Chewy. com channels.

These two channels comprise 93% of the company’s sales. Holden2 has an impressive growth history, with almost 100% of LTM growth for sales of SEK 149m. The company has EBITDA margins of 16%, lower than group average (33% ‘21e pre Holden2).

Holden2’s business model has been to sell other manufacturers’ products under its strong consumer brand Pet MD through online channels. Today, the company has c. 25 products under its umbrella, with four of them from Stratford Pharmaceuticals.

Strategic rationale Swedencare has a solid pipeline of synergy plans for the acquisition. (1) Under the strong Pet MD brand, the company is set to accelerate the roll-out of Swedencare’s D2C journey. (2) With Holden2’s expertise within e-commerce in general and Amazon & Chewy.

com in particular, the added in-house knowledge is likely to be valuable to the Swedencare group. (3) The company will increase the number of Swedencare products on the platform. All products sold on the Pet MD platform is likely to be sold under the Pet MD brand except ProDen Plaqueoff, due to the importance of the ingredient brand awareness.

‘21e EPS effect c. 10% assuming no growth or synergies The purchase price was SEK 178m. In order to finance the acquisition, the company has made a share issue of c.

SEK 200m. on the back of the new share issue, we get to an EPS accretion of c. 10% assuming no growth or synergies.

However, if we add the direct cost synergies of overlapping cogs from the Stratford products sold through Pet MD, we get to an EPS accretion of c. 14%.