TPG agrees $698m buyout of Australia's Greencross

This is the seventh PE-backed public-to-private bid announced in the past six months in Australia, following offers for Sirtex Medical, Scottish Pacific, Healthscope, Navitas, MYOB, and Capilano Honey. Four of those bids – plus a second approach for Healthscope, with an unchanged proposal – have come within the last two months, during which the ASX200 Index has dropped 8.2%.

The Greencross board said it was recommending that investors accept an offer of A$5.55 per share from TPG Capital and TPG Growth, the private equity firm’s global middle market investment platform. The scheme of arrangement includes a dividend payment of A$0.21 per share. Shareholders have also been offered a cash-and-share option whereby 25% or 50% of their interests in Greencross would be exchanged for shares in the TPG acquisition vehicle.

The offer represents a 34.1% premium to Greencross’ October 9 closing price, the last trading day before the company confirmed it was in talks with a number of prospective buyers. The earnings and EBITDA multiples are 18x and 10x, respectively, based on 2018 underlying net profit of A$37.2 million and underlying EBITDA of A$97.6 million.

Trading was halted on November 4 at A$4.55. It recommenced on November 5 and as of midday the stock was up 18.3% at A$5.37. Prior to October 9, the stock hadn’t passed A$4.55 in five months after an earnings downgrade sent it plummeting 22%.

“We are pleased to have reached unanimous agreement with the Greencross board on this proposal. Under private ownership the Greencross business, brands, and products will continue to grow and provide world-class services to the increasing number of pet lovers in Australia and New Zealand,” Joel Thickins, head of Australia and New Zealand at TPG, said in a statement.

Established in 1994, Greencross is Australasia's largest integrated consumer-facing pet care company. It has a veterinary practice network with more than 160 clinics and over 230 retail outlets under the Petbarn and City Farmers brands in Australia and under the Animates banner in New Zealand. In addition to selling food and pet food and accessories, it offers services such as grooming and washing.

TPG acquired a 6.92% stake in the company in late 2015 and offered to buy all outstanding shares for A$6.45 apiece in early 2016. Greencross said the offer undervalued the business and that it had received interest from other parties. TPG then teamed up with The Carlyle Group and together they accumulated a 15.42% voting interest. A take-private bid of A$6.75 per share followed, but this was rejected.

Greencross reported revenue of A$878.7 million for the 2018 financial year, up 7.5% year-on-year. However, EBITDA fell 20.7% to A$46.9 million, while net profit slumped 51.6% to A$20.6 million.

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• Topics
• Australasia
• Buyouts
• Consumer
• Australia
• TPG Capital