Dechra Pharmaceuticals Plc Sells Pet Wholesale Business To Patterson Companies, Inc

Published in Company Comment on 10 July 2013

Dechra Pharmaceuticals plc (LON:DPH) fails to meet the market's expectations in a trading update, and sells its oldest division to Patterson Companies, Inc. (NASDAQ:PDCO).

The shares of Dechra (LSE: DPH) slumped 7% to 694p during early London trade this morning after the pet treatment specialist revealed 13% annual revenue growth. The market was expecting greater combined results after Dechra's €135m acquisition of Eurovet last year.

The US market, where pet numbers dwarf the UK, remains Dechra's most obvious growth opportunity. Impressively, the company's two most important treatments Vetoryl and Felimazole grew sales by 11% and 16% respectively in the States.

Dechra's lucrative pet pharmaceuticals business was originally developed from cash flows siphoned from its low-margin wholesale and distribution division, NVS. Today, Dechra announced it would sell this services division, which still provides the majority of the company's revenues, to Patterson Companies (NASDAQ: PDCO.US) in a deal worth £87.5m.

Ian Page, Dechra's chief executive commented:

"The sale of our Services Segment represents a key strategic development for Dechra. It will create a focused, international, branded veterinary products business, with the resources to pursue further organic and acquisitive growth and thereby generate increased value for shareholders."

Dechra will use part of the proceeds to pay down its net debt position, which stands at around £100m following a string of acquisitions in recent years.

With a market cap of £604m, Dechra's shares trade at 18 times expected earnings, and offer a prospective dividend yield of 1.9%.

High-growth investment opportunities, at the right price, can provide excellent returns for smart investors. These sorts of opportunities can be hard to identify, but our team of top analysts have uncovered an ideal candidate!

If you're interested in high-quality growth companies like Dechra, why not check out the free stock research report for yourself? It's completely free, with no strings attached, and is available for a limited time only.

Just click here to download "The Motley Fool's Top Growth Stock For 2013"!

> Mark does not own any share mentioned in this article.

Share & subscribe

Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

 

There are no comments yet - why not be the first?

Join the conversation

Please take note - some tags have changed.

Line breaks are converted automatically.

You may use the following tags in your post: [b]bolded text[/b], [i]italicised text[/i]. All other tags will be removed from your post.

If you want to add a link, please ensure you type it as http://www.fool.co.uk as opposed to www.fool.co.uk.

Hello stranger

To add your own comment, please login.

Not yet registered? Register now.