Dechra Pharmaceuticals Plc Sells Pet Wholesale Business To Patterson Companies, Inc

Dechra Pharmaceuticals plc (LON:DPH) fails to meet the market’s expectations in a trading update, and sells its oldest division to Patterson Companies, Inc. (NASDAQ:PDCO).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The shares of Dechra (LSE: DPH) slumped 7% to 694p during early London trade this morning after the pet treatment specialist revealed 13% annual revenue growth. The market was expecting greater combined results after Dechra’s €135m acquisition of Eurovet last year.

The US market, where pet numbers dwarf the UK, remains Dechra’s most obvious growth opportunity. Impressively, the company’s two most important treatments Vetoryl and Felimazole grew sales by 11% and 16% respectively in the States.

Dechra’s lucrative pet pharmaceuticals business was originally developed from cash flows siphoned from its low-margin wholesale and distribution division, NVS. Today, Dechra announced it would sell this services division, which still provides the majority of the company’s revenues, to Patterson Companies (NASDAQ: PDCO.US) in a deal worth £87.5m.

Ian Page, Dechra’s chief executive commented:

“The sale of our Services Segment represents a key strategic development for Dechra. It will create a focused, international, branded veterinary products business, with the resources to pursue further organic and acquisitive growth and thereby generate increased value for shareholders.”

Dechra will use part of the proceeds to pay down its net debt position, which stands at around £100m following a string of acquisitions in recent years.

With a market cap of £604m, Dechra’s shares trade at 18 times expected earnings, and offer a prospective dividend yield of 1.9%.

High-growth investment opportunities, at the right price, can provide excellent returns for smart investors. These sorts of opportunities can be hard to identify, but our team of top analysts have uncovered an ideal candidate!

If you’re interested in high-quality growth companies like Dechra, why not check out the free stock research report for yourself? It’s completely free, with no strings attached, and is available for a limited time only.

Just click here to download The Motley Fool’s Top Growth Stock For 2013!

> Mark does not own any share mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Company Comment

Hand of person putting wood cube block with word VALUE on wooden table
Company Comment

Value has been building behind the Diageo share price

Despite the business growing, the Diageo share price first reached its current level just over 19 months ago and hasn't…

Read more »

Older couple walking in park
Investing Articles

5 stocks to buy for high and rising dividend income

I can see a host of shares to buy on the FTSE 100 offering me exceptional levels of income. Here…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I don’t care if FTSE 100 shares fall further, I’m buying them today

I'm happy to go shopping for FTSE 100 shares today, even though I accept that they could have further to…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Rolls-Royce shares are down 18% in a month and I’m finally going to buy them

Investors who bought Rolls-Royce shares have been repeatedly disappointed, but I'm willing to take a chance on them before they…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

How I’d invest £10k in a Stocks and Shares ISA today

Now looks like a good time to buy cheap FTSE 100 shares inside a Stocks and Shares ISA. These are…

Read more »

Black father holding daughter in a field of cows
Investing Articles

Today’s financial crisis is the perfect moment to buy cheap shares

I'm building a portfolio of FTSE 100 stocks by purchasing cheap shares whenever I see an opportunity. There's a good…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

I’d buy Tesco shares in October to bag their 5.4% yield 

Tesco shares have fallen lately but I think this makes them attractively valued for a dividend stock I would aim…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I would do anything to hold Diageo in my portfolio (but I won’t do that)

Diageo is one of my favourite stocks on the entire FTSE 100 and I'd love to hold it, but one…

Read more »