EBOS chasing Real Pet Food

Healthcare company EBOS is believed to be weighing up a purchase of the Real Pet Food Company. Picture: iStock

The $7.4bn healthcare company EBOS is believed to be weighing up a purchase of the Real Pet Food Company, which has been put up for sale by investment bank Citi.

DataRoom understands that EBOS, which is the largest marketer, wholesaler and distributor of healthcare and pharmaceutical products in Australia and New Zealand, has been working on a possible purchase of the $1.1bn business in recent months under the leadership of outgoing boss John Cullity, who has run the company since 2018.

Private equity firms such as Pacific Equity Partners, Navis Capital and potentially Kohlberg Kravis Roberts will also consider the opportunity.

EBOS recently announced that former Orica executive Adam Hall would succeed Mr Cullity as chief executive from July 1, and the acquisition plan has been paused for a short period to enable the new boss to determine whether he wants to pursue it, sources say.

EBOS, which has $1bn of net debt, has been searching for acquisition opportunities after it lost a contract with Chemist Warehouse worth $1.1bn annually in June last year.

Chemist Warehouse gave the contract to its merger partner Sigma. It accounted for about 17 per cent of its annual revenue.

EBOS is the country’s largest pharmaceutical wholesaler.

As it stands, a minor amount of its earnings comes from pet retailing. It owns 50 per cent of pet retailer Animates in New Zealand and generates about 10 per cent of its annual earnings from the sale of Black Hawk Pet Food, which it owns.

It is behind the Terry White Chemmart pharmacy chain, with about 600 stores in Australia and New Zealand.

Australia accounts for 65 per cent of the overall EBOS business, which controls half of the Australian community wholesale pharmacy market and 30 per cent in New Zealand.

Community pharmacy accounts for 41 per cent of its business.

EBOS had planned to buy pet care retailer and vet chain Greencross from TPG Capital for up to $4bn in 2023. The deal was on the brink of completion, but a lack of investor support for a $2bn equity raising derailed plans at the final hour.

At that time, its market value was $6.7bn.

Real Pet Food describes itself as a leading international pet food company with operating businesses in Australia, New Zealand, China and Britain. It has long been rumoured to be for sale.

It is the largest independent pet food manufacturer in Australia and among the 20 largest in the world, generating an estimated $130m to $140m of annual earnings before interest, tax, depreciation and amortisation.

It underwent a $243m refinancing in 2023, with existing investors injecting more capital into the business.

These included Chinese conglomerate New Hope Group, Singapore state-owned company Temasek and private equity firm Hosen Capital.

The company sells a range of products through grocery, pet speciality and e-commerce channels under brands including Farmers Market, Nature’s Gift, Billy + Margot, Ivory Coat, Love’em pet treats and Fussy Cat.

New Hope, Hosen Capital and Temasek purchased The Real Pet Food Company from Quadrant in 2017 for $1bn.

Sydney-based Quadrant had purchased VIP Pet Foods in 2015 for $410m, expanded the operations and renamed it the Real Pet Food Company, before selling it just two years later.

The company, run by Germaine Chua, has 900 employees globally and operates seven manufacturing plants.

It also has pet treat maker Vet’s Best Products.

According to IBIS World, the Real Pet Food Company has 16.1 per cent of the Australian pet-food market and generated $488m of revenue and a $22m loss in 2023.

Pet food companies sold for strong prices during the Covid-19 pandemic, when the rate of pet adoption soared.