Dechra’s US acquisition advised in Birmingham

STOKE-based Dechra Pharmaceuticals has acquired a US veterinary preparations company in a £40m ($64m) deal advised by the Birmingham office of DLA Piper.

The veterinary product specialist also announced it has agreed new banking facilities with Lloyds TSB Corporate Markets and Handelsbanken in the West Midlands.

DermaPet, a Florida based business was established in 1991 and develops and markets a range of dermatological preparations, including shampoos, conditioners and ear products, for the US and overseas pet markets. The products are marketed and distributed through the same channels as Dechra’s current US product portfolio.

Dechra said the DermaPet range increased US presence and complements its EU range in a key strategic category.

For the six months ended 30 June 2010, DermaPet’s revenue was £4.3m ($6.9m) and pre-tax income was £1.9m ($3m). Gross assets at 30 June 2010 were £1.75m ($2.8m). In the last full financial year ended 31 December 2009, DermaPet achieved revenue of £6.68m ($10.7m) and pre-tax income of £2.5m ($4m).

The maximum cash consideration for the acquisition is £40m ($64m), and £26.23m ($42m) has been paid on completion, with further payments due on anniversary and revenue targets.

Ian Page, chief executive of Dechra, said: “This acquisition is expected to be materially earnings enhancing in its first full year of ownership. It also further strengthens our position as a leader in the worldwide veterinary dermatological market whilst significantly increasing our presence and scale of operation in the United States.”

Dechra  has also agreed a new four-year bank facility which will replace the group’s existing borrowing facilities and finance this acquisition. The total debt facilities are £78m with Lloyds TSB Corporate Markets providing £50m and Handelsbanken the remaining £28m.

Murray Stewart, relationship director for Lloyds TSB Corporate Markets in the West Midlands, said: “We’ve been working with the executive management team at Dechra for over 13 years. Our working relationship over that time has given us a clear insight and strong understanding of the business and its strategic aspirations. We’ve seen this business grow from a UK company to an international player, and believe that this acquisition is a great strategic fit for Dechra.”

Mike Smith, Manager at Handelsbanken, Stoke on Trent said: “The latest acquisition represents our continued support to the Company whilst operating alongside Lloyds Group. I consider the latest acquisition to be an excellent strategic fit and look forward to developing this further, as the business  continues to grow in Europe and in the American market.”

DLA Piper New York and Birmingham offices advised Dechra on the transaction.