PetIQ, Inc. Receives FTC Approval to Close Acquisition of the Capstar® Portfolio of Products
July 16 2020 - 4:05PM
PetIQ, Inc. (“PetIQ” or the “Company”) (Nasdaq: PETQ), a leading
pet medication and wellness company, today announced they have
received final approval from the U.S. Federal Trade
Commission (“FTC”) and will close the $95 million cash acquisition
of the Capstar® portfolio of products from Elanco Animal Health,
Inc. (“Elanco”) (NYSE: ELAN) on July 31, 2020. Capstar is the
#1 oral over-the-counter (“OTC”) flea treatment product in the
United States. PetIQ expects that this acquisition will be
immediately accretive to earnings following the closing and
thereafter due to the strong performance of the brand.
The Capstar portfolio is comprised of seven
SKUs, including three private label SKUs which are sold under the
Capaction® brand. Capstar® is an oral tablet for the
treatment of flea infestations on dogs, puppies, cats and kittens
and is currently the best-selling oral OTC flea treatment product
in the United States. Additionally, Capstar® is the only oral
OTC product for cats in the market today.
Cord Christensen, PetIQ’s Chairman and Chief
Executive Officer, commented, “We are excited
to have cleared all hurdles needed to close this highly
accretive acquisition. We believe the acquisition of Capstar is a
natural fit with our pet health and wellness platform as we further
enhance PetIQ’s manufactured product business with the addition of
Capstar’s industry leading animal health product portfolio. We have
been distributing the Capstar brand for several years and have a
deep appreciation for the trust that pet parents have in their flea
treatments, which is demonstrated by their very attractive
position. We believe that PetIQ is well positioned to support
and grow Capstar across sales channels long-term.”
Strategic and Financial
Benefits
PetIQ believes the combination will provide the
following strategic and financial benefits:
- Further Diversifies and
Expands PetIQ’s Manufactured Pet Health and Wellness Branded
Product Offerings: The addition of the Capstar portfolio
complements PetIQ’s existing portfolio of manufactured products,
which was recently expanded by the addition of products sold under
the brands of Perrigo Animal Health. The acquisition further
supports the Company’s product category, brand, and sales channel
diversity with a focus on accessible and affordable, high-quality
flea infestation treatments.
- Enhances Product Segment
Financial Profile with High-margin Manufactured Product
Line: The Capstar portfolio will represent the highest
margin business within the PetIQ product segment. The
transaction and related assets are isolated to the products, brands
and associated registrations and does not include any physical
manufacturing assets or incremental labor. The transition of
the asset is supported by a 24 month manufacturing and service
agreement with Elanco, who will systematically assist PetIQ in the
transition of production to PetIQ’s state of the art facility in
Omaha, NE.
Transaction Details
The assets associated with the Capstar portfolio
will be acquired for $95 million in cash. PetIQ will own the
complementary product portfolio of Capstar’s highly recognized
brand allowing for PetIQ to realize short, mid and long-term value
creation putting PetIQ in a leading position in
anti-parasitics, a key growth segment of the animal health
industry. The Company will finance the transaction with proceeds
from the convertible note issuance it previously closed in May
2020. Pro forma for the transaction, including the annualized
EBITDA contribution of Capstar, PetIQ expects an immaterial change
to its net debt-to-Adjusted EBITDA leverage ratio. PetIQ
remains committed to reducing its leverage through a combination of
organic growth and free cash flow.
About PetIQ
PetIQ is a leading pet medication and wellness
company delivering a smarter way for pet parents to help their pets
live their best lives through convenient access to affordable
veterinary products and services. The company engages with
customers through more than 60,000 points of distribution across
retail and e-commerce channels with its branded distributed
medications, which is further supported by its own world-class
medications manufacturing facility in Omaha, Nebraska. The
company’s national service platform, VIP Petcare, operates in over
3,400 retail partner locations in 41 states providing cost
effective and convenient veterinary wellness services. PetIQ
believes that pets are an important part of the family and deserve
the best products and care we can give them. For more
information, visit www.PetIQ.com.
Forward Looking Statements
This press release contains forward-looking
statements that involve risks and uncertainties, such as statements
about our plans, objectives, expectations, assumptions or future
events. In some cases, you can identify forward-looking statements
by terminology such as "anticipate," "estimate," "plan," "project,"
"continuing," "ongoing," "expect," "believe," "intend," "may,"
"will," "should," "could" and similar expressions.
Forward-looking statements involve estimates, assumptions, known
and unknown risks, uncertainties and other factors that could cause
actual results to differ materially from any future results,
performances, or achievements expressed or implied by the
forward-looking statements. Forward-looking statements should not
be read as a guarantee of future performance or results, and will
not necessarily be accurate indications of the times at, or by,
which such performance or results will be achieved. Forward-looking
statements are based on information available at the time those
statements are made or management's good faith belief as of that
time with respect to future events, and are subject to risks and
uncertainties that could cause actual performance or results to
differ materially from those expressed in or suggested by the
forward-looking statements. Important factors that could cause such
differences include, but are not limited to, our ability to
successfully grow our business through acquisitions; our dependency
on a limited number of customers; our ability to implement our
growth strategy effectively; disruptions in our manufacturing and
distribution chains; competition from veterinarians and others in
our industry; reputational damage to our brands; economic trends
and spending on pets; the effectiveness of our marketing and trade
promotion programs; recalls or withdrawals of our products or
product liability claims; our ability to manage our manufacturing
and supply chain effectively; disruptions in our manufacturing and
distribution chains; our ability to introduce new products and
improve existing products; our failure to protect our intellectual
property; costs associated with governmental regulation; our
ability to keep and retain key employees; our ability to sustain
profitability; and the risks set forth under the “Risk Factors” of
our Annual Report on Form 10-K for the year ended December 31, 2018
and other reports filed from time to time with the Securities and
Exchange Commission.
Additional risks and uncertainties not currently
known to us or that we currently deem to be immaterial also may
materially adversely affect our business, financial condition or
operating results. The forward-looking statements speak only
as of the date on which they are made, and, except as required by
law, we undertake no obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of
unanticipated events. In addition, we cannot assess the impact of
each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
Consequently, you should not place undue reliance on
forward-looking statements.
CONTACT:
Investor Relations Contact: |
Media Relations Contact: |
ICRJeff Sonnek646-277-1263 jeff.sonnek@icrinc.com |
ICRCory Ziskind646-277-1232cory.ziskind@icrinc.com |
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