CD&R and TPG Club-Up on Buy of Covetrus
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CD&R and TPG Club-Up on Buy of Covetrus

The $4 billion enterprise valuation for Covetrus equals 14.8x estimated FY2022 EBITDA

Covetrus' services include practice management software, prescription management, customer engagement services, and supply chain management

SOURCE: Covetrus

Clayton, Dubilier & Rice and TPG have agreed to acquire Covetrus, a provider of animal health services, at an enterprise value of $4 billion.

Covetrus (NASDAQ: CVET) is a provider of animal-health technology and services including practice management software, prescription management, customer engagement services, and supply chain management. The company’s customers are typically veterinarians in the companion, equine, large animal and animal welfare markets. Covetrus is headquartered in Portland, Maine and is led by CEO Benjamin Wolin.

“This transaction is an important milestone for our company, shareholders, employees, customers and partners,” said Mr. Wolin. “Not only does this deal provide compelling value for our existing shareholders, but it also allows Covetrus to continue its mission to drive positive outcomes – both business and healthcare – for veterinarians across the globe. We appreciate CD&R’s support and their continued commitment to our company and the global veterinary community.”

Covetrus was formed in March 2019 when health care products distributor Henry Schein (NASDAQ: HSIC) spun out its animal health business and immediately merged it with Vets First Choice, a provider of back-end pharmacy services.

“Covetrus has undergone a true transformation since our initial 2015 investment in its predecessor Vets First Choice, growing from $55 million in revenue-focused primarily on online pharmacy in the United States to a leading global provider of animal health services with more than $4.6 billion in revenue,” said Sarah Kim, a partner at CD&R.

For the full year 2022, Covetrus’ adjusted EBITDA is estimated at $270 million. Based on a $4 billion enterprise valuation this equates to a 14.8x purchase price multiple.

New York and London-based CD&R invests in European and United States-based businesses. Since its founding in 1978, the firm has invested more than $35 billion in over 100 companies across a range of industries including consumer, retail, healthcare, industrial, technology and business services.

“The company is at an important stage in its ongoing evolution, and we look forward to partnering with management and CD&R to further its leadership in the growing animal health space,” said Kendall Garrison, a partner at TPG.

TPG invests in a wide range of asset classes, including private equity, growth equity, real estate, credit, and public equity. The firm, founded in 1992, has more than $96 billion of assets under management and has headquarters in San Francisco, California, and Fort Worth, Texas.

Goldman Sachs and Lincoln International are the financial advisors to Covetrus. Deutsche Bank, UBS, BMO Capital Markets and Mizuho Securities have provided committed debt financing for the transaction.

This transaction is expected to close in the second half of 2022.

© 2022 Private Equity Professional | June 15, 2022

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