Greencross’ $3.75b deal with EBOS dumped as investors lose bite

afr.com:

A $3.75 billion deal for pharmaceutical and animal goods distributor EBOS to buy pet food and veterinary business Greencross has collapsed at the last minute after tepid investor support for funding the acquisition.

“A transaction will not proceed,” EBOS, listed on the Australian and New Zealand stock exchanges, told investors on Wednesday.

Greencross, which includes veterinary clinics, was to be sold in a $3.75b deal.  Simon Schluter

The deal’s collapse kills off in the short term an avenue for EBOS, whose brands include pharmacy outlets Terry White Chemmart and premium pet food brand Black Hawk, to drive additional growth in its animal products division.

The company has been promoting a mantra of diversification after losing, from next June, a $2 billion-a-year contract supplying Chemist Warehouse. Rival Sigma Healthcare won the contract.

The latest deal’s failure also leaves Greencross’ majority owner, private equity firm TPG Capital, considering options after its 2019 acquisition of the outfit, which includes veterinarian clinics and the retail Petbarn chain.

A source with knowledge of the sale proposal suggested the impending Christmas break made any quick resolution more difficult.

The Australian Financial Review’s Street Talk column unveiled details of funding options for the deal on Tuesday evening including a proposed $2 billion equity raising for EBOS, with Macquarie advising it for a period.

But sources with knowledge of the transaction gave duelling reasons on Wednesday for why the deal did not get across the line in the market.

One source argued support from institutional investors was not sufficient following concerns about the free float – the level of shares publicly available to trade. Less liquidity in