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Just one day after announcing yet another spending spree, allied health group Healthia (HLA) is about to make its largest acquisition yet with its eyes on a $43 million acquisition of The Optical Company (TOC).
The Brisbane-based company has entered a binding agreement to buy 100 per cent of TOC and will be rattling the tin to shareholders to raise $15.3 million towards the purchase.
The entitlement offer will be at $0.95 per HLA share, representing a 7.8 per cent discount to yesterday's closing price.
In addition, Healthia will issue 9.4 million shares to the owners of TOC, a leading Australian optometry business with 41 stores including such brands as Kevin Paisley Optometrists, nib Eye Care, Optical Warehouse and Stacey & Stacey Optometrists, as well as its namesake brand.
These new issuances will dilute current shareholdings with 40.4 per cent more shares on issue, although six directors including CEO Wesley Coote have indicated they will participate in the offer.
"The opportunity to acquire a highly complementary allied health business of the quality and size of TOC is compelling," says Coote.
"TOC is a natural fit with Healthia and its stated strategic objectives of acquiring value accretive businesses in the allied health industries.
"TOC also provides Healthia with the expertise, people, platforms and systems required for continued organic and acquisitive growth in the optometry industry."
The new business is expected to deliver 15 per cent earnings per share (EPS) accretion based on its underlying financial performance in FY20, with TOC founder and CEO Colin Kangisser in line to lead a newly formed 'Eyes & Ears' division at Healthia.
"We are excited to partner with Healthia. We believe there is a strong alignment between our respective businesses and that there exists a significant opportunity to continue our organic and acquisitive growth," says Kangisser.
"I am proud of the TOC business, and staff across support office and in the stores and look forward to our next phase of growth with Healthia."
The Eyes & Ears business is predicted to account for 30 per cent of underlying EBITDA, complementing the Feet & Ankles (43 per cent) and Bodies & Minds (27 per cent) segments.
Healthia management is bullish for the future of Australia's optometry industry, buoyed by an ageing population, growing awareness of eye health and UV eye protection, increasing digital eyestrain due to greater use of computers and mobile phones, and favourable fashion trends.
The optometry and optical dispensing industry revenue is estimated to be worth $3.8 billion and is expected to grow at 2.1 per cent annually from 2020 to 2025.
TOC represents just a small footprint in an industry with around 3,500 stores nationwide, whose leading players are Luxottica and Specsavers with around one fifth of the market by store numbers.
The market is therefore highly fragmented, creating opportunities for consolidating businesses like Healthia to grow.
The announcement follows yesterday's news Healthia had entered into an agreement to buy Natural Fit Footwear - comprising six stores in NSW and Victoria - for more than $2 million, as well as three clinics under the banner of North Queensland Physiotherapy Centre (NQPC) for $1.3 million.
Those acquisitions came on the back of the completion yesterday of deals announced in late August, comprising acquisitions of one podiatry clinic in South Australia and three physiotherapy clinics in Queensland as part of the CQ Physio Group.
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