EBOS shifts focus from jilted Greencross to Paragon Care

EBOS seems to be moving on faster-than-expected from its $4bn courtship of Greencross, with talk that it is eyeing Paragon Care.

EBOS seems to be moving on faster-than-expected from its $4bn courtship of Greencross, with talk that it is eyeing Paragon Care.

While small, with just a $113.5m market value, Paragon Care operates in the areas of Specialty Diagnostics, Specialty Devices, Capital and Consumables and Service and Technology under brands such as Designs for Vision, Electro Medical Group, Specialist Medical Supplies and Immulab.

It gets parties taking a look at it from time to time.

Apparently, there’s a large Asian private equity firm also interested in buying the business right now.

However, should there be interest, as suggested, it is likely to be early days, with sources close to the company saying that it has not received approaches.

EBOS has a major earnings hole to fill after the loss of the Chemist Warehouse contract to rival Sigma, responsible for providing $1.1bn annually and 17 per cent of its overall revenue.

Despite its net profit increasing 61 per cent to $15.6m in the year to June, it’s curious Paragon Care’s share price has fallen 44 per cent in the past year, which perhaps makes it the right time to strike for a suitor.

Sources say the group has been yet to prove to the market it can deliver on its mergers and acquisition strategy.

Other parties that have looked at Paragon in the past are Navis Capital, which now owns Device Technologies.

Navis Capital spent $700m in 2019 on buying Device Technologies, and DataRoom understands that it is planning a sale of that business in about six months.

When Navis invested in Device Technologies, its strategy was to use the company’s superior sales and distribution platform to grow share through new agencies and mergers and acquisitions and to expand into Southeast Asia.

At the time Device Technologies was for sale, EBOS also took a look.

EBOS shares have rallied after initially falling on news it was in talks to buy the pet care retailer and vet chain Greencross, which DataRoom understands was to be accompanied by a $2bn raising.

However, the deal collapsed when it lacked strong investor demand to buy shares in the equity raising.

They closed on Monday at $34.72, with its market value at $6.22bn.

EBOS, advised by Macquarie Capital, sells pharmacy products wholesale to more than 7000 hospitals as the largest and most diversified Australasian marketer, wholesaler and distributor of healthcare, medical and pharmaceutical products and animal care brands.