The National Veterinary Care Ltd (ASX: NVL) share price increased by 7% on Monday after making an announcement about an acquisition.
National Veterinary Care is one of the largest veterinary service businesses in Australia and New Zealand. It aims to grow its network of clinics through acquisitions and improve their performance organically at a clinic level. It has acquired around 100 vet businesses across the two countries since 2015 and is adding more as time goes on.
National Vet Care’s Latest Acquisition
National Vet Care announced that it is acquiring a veterinary procurement business / ‘GPO’, which is expected to settle by the end of September 2019.
Together with its existing management services business United Vets Group, it expands the company’s capacity to service a larger share of the $3 billion vet industry. The acquisition has operated for five years and services 80 vet clinics. The company’s managed services will increase by 18% to 500 after the acquisition.
The cost is $5 million including a deferred component of $0.5 million, which is not bad for a business with $2.4 million of revenue and EBIT of $0.9 million.
A roll-up strategy isn’t the greatest tactic ever, but it can work if National Vet Care generates operating leverage as it grows larger. So it could be worth watching for the shorter term. But the growth shares in the free report below could be even better ideas.
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