GREENCROSS SECURES CITY FARMERS FOR $205M

Written on the 16 June 2014

GREENCROSS SECURES CITY FARMERS FOR $205M

GREENCROSS Limited (ASX:GXL) has strengthened its grasp on the pet care sector, after acquiring Western Australia-based retailer City Farmers for $205 million.

Quadrant Private Equity and other shareholders agreed to the deal, which consists of 42 locations and opportunities to expand the veterinary brand in-store.

City Farmers is forecast to deliver annual revenue of approximately $120 million and earnings before interest, tax, depreciation and amortisation of $20 million in FY15.

The acquisition is believed to be earnings accretive in FY15 for Greencross shareholders, while sales for FY14 are expected to tip $555 million.

Greencross CEO Jeff David says the move will strategically expand the company’s national footprint.

“The combination of Greencross and City Farmers brings together two of Australia’s outstanding pet specialists and increases our exposure to the Western Australian market.

“The transaction underscores our commitment to becoming the leader in the rapidly growing pet care market,” he says.

The acquisition will be funded through a combination of new debt and equity, expanding the network to 285 stores and clinics across Australia and New Zealand.

The announcement comes off the back of an improved financial outlook, to achieve full year net profit after tax of $21.5 million.

The Greencross and Mammoth merger in January upped a previous guidance of 31.5 cents earning per share (EPS), to 33 cents in FY15.

Following the City Farmers acquisition, EPS in FY15 is expected to reach up to 36 cents.

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