Ebos Group increases Transmedic Pte Ltd shareholding from 51 percent to 90 percent

About Ebos Group

Ebos Group Limited (Ebos, the Group, ASX:EBO) is a diversified wholesaler and distributor of healthcare, medical and pharmaceutical products, as well as animal care products. The Group employs 5000 people across 108 locations throughout Australia, New Zealand, and Southeast Asia. Group segmental earnings comprise 41 percent pharmaceutical, 37 percent healthcare, 12 percent animal healthcare and 10 percent contract logistics. Eighty-one percent of revenue is derived from the Group’s Australian operations and 19 percent from New Zealand. The Group’s shares are listed on the Australian and New Zealand stock exchanges.

Transmedic shareholding increased to 90 percent ownership

EBO has increased its shareholding in Transmedic Pte Ltd (Transmedic) from 51 percent to 90 percent. Transmedic is one of the largest independent medical device distributors is Southeast Asia with a presence in seven countries, being Singapore, Indonesia, Malaysia, Philippines, Thailand, Hong Kong and Vietnam. Transmedic has long term relationships with global medical device manufacturers that have their products in hospitals and other clinical settings across various therapeutic channels, such as spine, orthopaedics, cardiology, ophthalmology and radiation therapy.

The purchase price for the additional 39 percent shareholding is AUD$135 million and is being funded from existing debt facilities. The transaction is anticipated to be immediately marginally EPS accretive. Significantly, Transmedic’s major shareholder and chairman has agreed to retain a 10 percent shareholding in Transmedic and remain chairman for a further two years. EBOS has the option to acquire the outstanding 10 percent of Transmedic that it doesn’t currently own at the conclusion of this period.

The Transmedic business has performed well under EBO’s existing ownership as it continues to grow throughout Southeast Asia.

Trading Update

On 22 November EBO provided a positive trading update noting that underlying revenue and EBITDA growth for the first four months of the 2024 financial year is running at 8.2 percent and 8.8 percent respectively. This strong growth is consistent with Ebos’ long term historical growth rates.

The trading update included reference to discussions regarding a potential strategic transaction related to the Group’s Animal Care segment. The discussions have concluded without a transaction proceeding. Market speculation and press commentary suggest that the potential transaction involves acquisition of either Paragon Care Limited (ASX:PGC) or Greencross Limited (ASX:GXL). Ebos is an acquisitive Group and either of these potential transactions may re-emerge at some future date.

Looking Ahead

The Group’s earnings are growing on several fronts. The growing and ageing population supports structural growth in healthcare and pharmaceutical revenues, while growth in the animal care industry is supported by increased pet ownership and the ‘humanisation’ of pets.

Ebos is a diversified, defensive business with operating scale and market-leading positions within sectors in which it participates. Healthcare and Animal Care are likely to maintain their record of consistent earnings growth supported by structural tailwinds which should deliver increased fully franked dividends to shareholders.