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MWI Vet Closes Buyout
In a concerted effort to strengthen its market position,
MWI Veterinary Supply Inc. recently closed the acquisition of all the assets of Prescription Containers Inc. for about $17 million. While we await further details, this acquisition is expected to be immediately accretive to MWI Vet earnings for the current fiscal, ending September 30, 2013.
New Jersey-based Prescription Containers is a distributor of companion animal health products to more than 2,000 veterinary practices. With revenues of $33 million in 2012 from PCI Animal Health, the privately-owned company mainly focuses on the Northeastern markets of the United States.
MWI Vet continues to focus on organic growth as reflected in its strategy of selective acquisition. The Prescription Containers buyout was the company’s only purchase in 2012, the last being in October 2011, when it acquired Micro Beef Technologies Ltd. in a cash and stock deal.
The recent acquisition is expected to seamlessly strengthen the distribution network of MWI Vet in the domestic market. Moreover, with a growth rate of 30% for Prescription Containers substantial market proliferation seems to be on the cards, especially in those areas where it is relatively strong. The acquisition is also a strategic fit for MWI Vet, which had earlier declared its intent to increase customers in the Northeastern region, where it lags the market leader.
We currently have a long-term ‘Neutral’ recommendation on MWI Vet, which carries a short-term Zacks #3 Rank that translates into a Hold rating. Given the slight accretion from the recent buyout, we are optimistic about the company successfully achieving its top as well as bottom-line goals for fiscal 2013. However, MWI Vet operates in a fragmented and highly competitive veterinary distribution services market with strong players like Henry Schein, Inc. ( HSIC - Analyst Report) , which carries a Zacks #2 Rank (Buy).