$350 million sale anticipated in second half of 2024
29 April 2024
3 minute learn
Zoetis Inc. (NYSE:ZTS) and Phibro Animal Well being Company (Nasdaq: PAHC) right this moment introduced that they’ve entered right into a definitive settlement the place Phibro Animal Well being will purchase Zoetis’ medicated feed additive (MFA) product portfolio, sure water soluble merchandise and associated belongings for $350 million, topic to customary closing changes. This transaction is predicted to be full within the second half of calendar yr 2024.
Each Zoetis and Phibro Animal Well being have a longstanding dedication to the manufacturing animal well being sector. The acquired product portfolio, which generated roughly $400 million in income in 2023, is comprised of greater than 37 product strains which might be bought in roughly 80 nations. Additionally included within the settlement are six manufacturing websites, 4 within the U.S., one in Italy and one in China. Greater than 300 Zoetis colleagues who assist manufacturing, distribution and industrial actions are anticipated to transition to Phibro Animal Well being.
This transaction demonstrates Zoetis’ disciplined capital allocation technique to focus its investments on options for animal well being, productiveness and sustainability. With this divestiture, Zoetis can focus its livestock investments in different options, together with vaccine, biologic and genetic applications.
“We stay dedicated to offering modern options to our livestock clients,” mentioned Kristin Peck, Chief Government Officer of Zoetis. “We imagine that the long-term worth of the transferred portfolio might be absolutely realized with Phibro Animal Well being which is able to proceed to broaden its attain given their sturdy relationships with clients worldwide.”
Zoetis’ sturdy portfolio of MFA and water soluble merchandise throughout cattle, swine and poultry will complement and broaden Phibro Animal Well being’s species and product portfolios, serving to clients meet the very best requirements of animal care, stop illness, and improve diet. On a mixed foundation for the acquisition, Phibro Animal Well being gross sales within the final twelve months would have been roughly $1.4B. The portfolio is predicted to spice up Phibro Animal Well being’s profitability and EBITDA margin and be accretive to its Adjusted Earnings Per Share. The acquisition is predicted to be funded primarily with debt, and Phibro Animal Well being has acquired financing commitments from plenty of key relationship banks. Phibro Animal Well being expects to have web leverage of three.5-4.0x Debt / Adjusted EBITDA at shut and can goal web leverage of under 3.0x by its fiscal yr finish June 30, 2027.
“Over a protracted time frame, Zoetis has constructed a useful, high-quality and dependable supply of medicated feed components across the globe,” mentioned Jack C. Bendheim, Chairman, President and Chief Government Officer of Phibro Animal Well being. “This funding will improve, diversify and broaden our portfolio globally and assist us proceed to ship worth to our clients and to our shareholders. We imagine our money era will permit for continued funding into our larger progress companies of Dietary Specialties, Companion Animal, and Vaccines. I’m assured now we have the suitable capabilities to combine and strengthen this enterprise. I sit up for collaborating with the Zoetis workforce and welcoming new colleagues to Phibro Animal Well being to assist this portfolio.”
Zoetis and Phibro Animal Well being will work carefully with their colleagues and clients to make sure a easy transition and continued provide of those necessary merchandise.
Guggenheim Securities, LLC is performing as unique monetary advisor to Zoetis and Wachtell, Lipton, Rosen & Katz is performing as authorized advisor. Citi is performing as unique monetary advisor to Phibro and Kirkland & Ellis LLP is performing as authorized advisor.
Phibro Animal Well being might be internet hosting an investor name on April 29 at 8:30 am. events are invited to hearken to the convention name and consider the presentation slides by visiting https://buyers.pahc.com. The dialogue can even be out there by dialing +1 (888) 596-4144 within the U.S. and Canada, or +1 (646) 968-2525 for worldwide callers. Present the convention ID 6159146.
An actual time audio webcast will be accessed through Phibro’s investor relations web site at https://buyers.pahc.com. Convention name slides might be posted to the web site upfront of the decision.
