Paragon Care Limited (ASX:PGC) has reached agreement to acquire the business of Specialist Medical Supplies Pty Ltd (SMS) for $15.5 million.
Current maintainable EBITDA is approximately $3.0 million per annum.
SMS is the leading supplier in Australia of biopsy and skin lesion instrumentation and other related products as well as a urethral bulking agent used in the treatment of female stress urinary incontinence.
Operating since 1993, SMS has headquarters and a distribution centre located at Macquarie Park, NSW and supplies the pathology market, local specialist distributors and hospitals, predominantly in NSW and Queensland.
While our main focus in the short term is on organic growth, SMS fits neatly into the existing Paragon Care ‘pillar’ structure with significant customer alignment so this acquisition is logical both in terms of strategic match and our capability to expand its portfolio across Paragon Care’s existing sales and distribution channels,” Paragon Care’s Group CEOand& Managing Director, Mark Hooper, said.
“The SMS business will largely be integrated into Paragon Care’s existing Diagnostics pillar while the SMS urology product will be integrated into the Capital & Consumables pillar. The combination of strong partnerships with existing customers and suppliers together with complementary product ranges are factors expected to drive further expansion in geographic reach and market penetration.”
The transaction will be funded by 20% scrip and 80% cash and is expected to be completed by the end of August 2022. The cash portion of the transaction will be funded from existing facilities. The vendors will also be entitled to an earnout payment based on 1.5 times any growth in EBITDA in the first 12 months.
