- Potential offer values the company at 4,070p per share, a 34 per cent premium
- Interim results showed growth but R&D spending hit earnings
Dechra Pharmaceuticals (DPH) shareholders are set for a treat, after the veterinary products company said it would recommend a 4,070p per share cash buyout by Swedish private equity for EQT. This puts a £4.6bn valuation on the company, a 52 per cent premium on its price before a blog published details of the deal on Thursday afternoon. Its shares climbed to 3,752p on the news, although this is still below its 12-month high of 4,130p.
No firm offer has been made yet, but Dechra said it would be “prepared, subject to the finalisation of all relevant terms in a manner satisfactory to it, to provide a [positive] recommendation at the possible offer price”. EQT has until 11 May to announce a firm intention to make an offer, as per Takeover Panel rules.
This interest comes after a weaker interim results statement, which said full-year earnings would be at the bottom end of guidance. Dechra’s interim earnings per share slumped to 20p, a 47 per cent drop on the year before.
EQT would not be the only party in the deal – the private equity arm of the Abu Dhabi Investment Authority would be a co-investor, Dechra said. EQT already owns a suite of healthcare businesses, including pharma companies. It even already has a pet health business in IVC Evidensia, which owns clinics and an online animal pharmacy. This is also a co-investment with a separate Abu Dhabi sovereign fund, Mubadala Investment Company.
Dechra’s top shareholders are largely institutional, including Fidelity, Vanguard and BlackRock. Chief executive Ian Page holds a stake worth £16.7mn at the offer price.
The company flagged a slowdown in non-agricultural animal spending growth after the pandemic pet boom in its interim results in February, although obviously those dogs and cats will continue to need care.
Dechra has grown significantly through acquisitions in recent years. In 2022, it spent $474mn (£379mn) on two companies largely in the pet pharmaceuticals sector. Excluding acquisitions, it saw 8.5 per cent sales growth in the first half.
