In a concerted effort to strengthen its market position,
MWI Veterinary Supply Inc.
) recently closed the acquisition of all the assets of
Prescription Containers Inc. for about $17 million. While we
await further details, this acquisition is expected to be
immediately accretive to MWI Vet earnings for the current fiscal,
ending September 30, 2013.
HENRY SCHEIN IN (HSIC): Free Stock Analysis
MWI VET SUPPLY (MWIV): Free Stock Analysis
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New Jersey-based Prescription Containers is a distributor of
companion animal health products to more than 2,000 veterinary
practices. With revenues of $33 million in 2012 from PCI Animal
Health, the privately-owned company mainly focuses on the
Northeastern markets of the United States.
MWI Vet continues to focus on organic growth as reflected in its
strategy of selective acquisition. The Prescription Containers
buyout was the company's only purchase in 2012, the last being in
October 2011, when it acquired Micro Beef Technologies Ltd. in a
cash and stock deal.
The recent acquisition is expected to seamlessly strengthen the
distribution network of MWI Vet in the domestic market. Moreover,
with a growth rate of 30% for Prescription Containers substantial
market proliferation seems to be on the cards, especially in
those areas where it is relatively strong. The acquisition is
also a strategic fit for MWI Vet, which had earlier declared its
intent to increase customers in the Northeastern region, where it
lags the market leader.
We currently have a long-term 'Neutral' recommendation on MWI
Vet, which carries a short-term Zacks #3 Rank that translates
into a Hold rating. Given the slight accretion from the recent
buyout, we are optimistic about the company successfully
achieving its top as well as bottom-line goals for fiscal 2013.
However, MWI Vet operates in a fragmented and highly competitive
veterinary distribution services market with strong players like
Henry Schein, Inc.
), which carries a Zacks #2 Rank (Buy).