Paragon Care Ltd (ASX: PGC) has announced that it is going to acquire Surgical Specialities Group, a distributor of surgical medical devices to the Australian and New Zealand markets, it has sales offices and warehouses throughout Australia and New Zealand.
The total amount to acquire Surgical Specialties Group will be a cash amount of $26 million and $6.4 million in Paragon shares.
According to Paragon, Surgical Specialties generated $30 million of revenue and $4.9 million of earnings before interest, tax, depreciation and amortisation during the 2017 calendar year.
Paragon management expect that the acquisition will be earnings per share (EPS) accretive in FY18 (and beyond), with the business experiencing strong growth this financial year.
The company said that this acquisition fits well into Paragon's strategy of offering a range of medical equipment, devices and consumables to the Australian and New Zealand market. The cash portion of the acquisition price is being funded by its past $69.8 million capital raising.
Paragon CEO Andrew Just said: "The acquisition of Surgical Specialties is aligned with Paragon's long-standing growth strategy to expand its medical device offering to existing and new customer base, and to increase the Company's geographical reach in Australia and New Zealand. Surgical Specialties has strong relationships with close to 20 recognised supplier brands. Paragon is excited about further increasing the sale, product offering and reach of its distribution platform via the acquisition of Surgical Specialties."
Foolish takeaway
This seems like a logical acquisition to me as it expands Paragon's offerings and will allow it to cross-sell to new and old customers. I hope that Paragon is able to grow its overall margins, is growing its underlying businesses organically and there is some actual benefit to the acquisitions, otherwise it's just 'acquiring' growth.
