Australia's Greencross rebuffs TPG buyout offer

The bid of A$6.45 per share is 5.1% lower than the last close before Greencross made its statement. However, the stock sank as low as A$6.43 in mid-December and then spiked when The Australian Financial Review reported that a private equity firm was looking to buy a sizeable stake in the company. Shortly before Christmas, TPG acquired a 6.92% voting interest in Greencross.

The company added that TPG's proposal was highly conditional and fundamentally undervalues the business. It claims to have received interest from other parties. The stock was up 3.71% at A$7.26 as of mid-afternoon trading on January 28.

Established in 1994, Greencross is Australasia's largest integrated consumer-facing pet care company. It has a veterinary practice network with more than 115 clinics and over 175 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.

The business achieved its current scale by combining the Greencross veterinary practices with Petbarn in 2013. Petbarn lost out to Quadrant Private Equity when bidding for City Farmers earlier that year, but in 2014 Greencross agreed to buy the asset from Quadrant for A$205 million.

Greencross is keen to bring about further consolidation in the fragmented veterinary services, pet food and pet accessories markets. It currently has an 8% share of these markets and is targeting 20%.

The industry is also attractive because of the "humanization" of pets, leading to increased demand for premium products and services. Greencross estimates the pet care market in Australia and New Zealand was worth A$8.7 billion in 2015 and it is expected to reach A$11 billion by 2020.

The company reported revenue of A$644.5 million for the 2015 financial year, up 45% year-on-year, while underlying EBITDA climbed 60% to A$86.8 million. Net profit increased from A$21.6 million to A$38.2 million. However, confidence in Greencross wavered when the CEO unexpectedly stood down in mid-2015 amid reports of tensions with the board.

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