MWI Veterinary Supply Inc.
) recently acquired all the assets of U.S.-based key competitor
IVESCO Holdings for $67.5 million along with net working capital
adjustment of $11.2 million. This initiative is part of a
concerted effort by MWIV to strengthen its business in the
MWI Vet, slated to release its fiscal-2013 results on Nov 7,
expects an impact of $1.0 million of pretax acquisition-related
expenses on its fourth-quarter net income. Nevertheless, the
company expects $400 million of annual revenues from IVESCO.
Additionally, this acquisition is also expected to be slightly
accretive to MWI Vet's fiscal-2014 performance, after adjusting
for acquisition-associated expenditure and integration costs.
This marks another strategic acquisition for MWI Vet. The
company constantly has its eye on accretive buyouts. We believe
that consolidation efforts in the veterinary distribution
business should help the company gain market share with
consequently greater pricing power against other players.
According to the company, acquisition-related expenditure
amounts to roughly $1.2 million in the fiscal fourth quarter
(ending Sep 30, 2013). The impact of this unanticipated
expenditure was naturally not included in MWI Vet's EPS guidance
for fiscal 2013.
As a value-added distributor of animal health products in
Springdale, AR, INVESCO appears to be a strategic fit for MWI
Vet. Presently, IVESCO's five business platforms - mixed animal
practice veterinarians, poultry integrators, swine integrators,
dealers and cattle, serve more than 6,000 customers in the U.S.
IVESCO distributes over 25,000 different products sourced from
Per management, the acquisition will boost MWI Vet's foothold
in the production animal market. Following the takeover, the
company will be in a position to offer an enhanced product
portfolio, with improved supply chain performance, to its vendors
and customers. Furthermore, the addition of IVESCO's
complementary business comes at a small premium over net tangible
assets for MWI Vet.
We are optimistic that MWI Vet should gain competitive
advantage on the basis of economies of scale, post-acquisition.
The enhanced financial profile should in turn, boost the
company's growth profile going forward.
Currently, MWI Vet looks like an attractive pick as it carries
a Zacks Rank #2 (Buy). Other stocks that warrant a look are
Align Technologies Inc.,
Cardinal Health, Inc.
Mindray Medical International Ltd
). All these stocks also carry a Zacks Rank #2.
ALIGN TECH INC (ALGN): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
MINDRAY MEDICAL (MR): Free Stock Analysis
MWI VET SUPPLY (MWIV): Free Stock Analysis
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