Dechra, Chesire vet drug giant, to sell 5m shares

Dechra Pharmaceuticals Plc, the Northwich, Chesire-based veterinary drugs giant, on Wednesday published a trading update for the period from July 1, 2019, to April 30, 2020, and an outlook for its financial years ending June 30, 2020, and June 30, 2021.

Dechra also announced a proposed placing of 5.1 million shares in the firm.

The company said it intends to conduct a non-pre-emptive placing of up to 5,132,500 new ordinary shares representing 5% of the company’s existing issued share capital — but did not give a placing price.

Dechra shares closed on Wednesday around £27.46 to give the firm a current stock market value of around £2.8 billion. Based on that closing share price, Dechra would raise around £140 million with the placing.

Explaining its reasons for the share placing, Dechra said: “The current financial year has been busy for Dechra operationally and in terms of acquisition activity.

“The company expects to have spent c. £180 million by the end of the financial year, or shortly thereafter, on the acquisitions of Mirataz, Ampharmco and Osurnia (once completed) and the increased investment in Medical Ethics.

“Leverage is expected to be c. 2.4x proforma EBITDA (on a pre IFRS 16 basis) at 30 June 2020.

“The placing is being conducted to allow Dechra to maintain a prudent balance sheet …

“The net proceeds from the placing will also provide Dechra with enhanced financial strength, resilience and flexibility through a period of possible disruption arising from Covid-19 so that the group is not constrained in maximising its long-term potential.

“The immediate deployment of part of the net proceeds of the placing will be to fund the Osurnia acquisition upon its completion …”

In its trading update, Dechra said: “The board is pleased to confirm that the outlook for the full year 2020 is broadly in line with management expectations, despite the disruption that has been caused by Covid-19 …

“Group revenue for the period increased by c.10.5% at constant exchange rates (CER) …

“European Pharmaceuticals revenue growth was c.11.8% at CER in the period …

“North American Pharmaceuticals revenue increased by c.8.3% at CER in the period …

“Net debt for the year ending 30 June 2020, prior to receipt of the net proceeds from the placing, and assuming the completion of Osurnia, is expected to be £386 million …

“Although trading has softened, and will most likely remain challenging until year end, it has been offset by a record March as veterinarians stocked up on essential medicines.”

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