Portland-based Covetrus to be taken private in $4 billion deal
May 25—Portland-based veterinary products and services firm Covetrus Inc. has agreed to be taken private by a pair of private equity firms in a $4 billion deal.
The deal with Clayton, Dubilier & Rice, of New York City, and TPG Capital, of San Francisco, was announced early Wednesday. The management team leading Covetrus will remain, they said, and the prospective new owners say they intend to keep the firm's Portland headquarters.
"This transaction is an important milestone for our company, shareholders, employees, customers and partners," Covetrus President and CEO Benjamin Wolin said in a statement. "Not only does this deal provide compelling value for our existing shareholders, it allows Covetrus to continue its mission to drive positive outcomes — both business and healthcare — for veterinarians across the globe."
Covetrus is one of only four nonbank publicly traded companies in Maine. It is the state's largest public company in terms of annual revenue, but competitor Idexx, based in Westbrook, has a much larger market capitalization at nearly $31 billion, compared with Covetrus' nearly $3 billion market cap. The market cap represents the total value of all outstanding shares.
The two private equity firms have agreed to buy all outstanding Covetrus shares for $21 per share in an all-cash deal. The per-share purchase price is about 40 cents above Covetrus' closing share price of $20.61 on Wednesday.
Its shares trade on the Nasdaq exchange under the symbol CVET. The company's stock price has fluctuated from a low of $6.22 per share in March 2020 to a high of $39.36 in February 2021.
Covetrus reported revenue of $4.58 billion last year and a net loss of $54 million, according to its year-end report.
Clayton, Dubilier & Rice invested $55 million in Vets First Choice, the Maine company that became Covetrus, about seven years ago. The firm still owns about 24 percent of Covetrus' outstanding shares.
"We are excited to have this opportunity to grow our investment in Covetrus and to do so in partnership with TPG and management," said partner Ravi Sachdev in a statement.
A spokesperson declined an interview request Wednesday to discuss how the company would benefit by withdrawing from the stock exchange and taking the company private. The companies did not respond to questions about whether the sale would impact its operations or workforce in Maine.
Transferring a public company to a private firm can help owners avoid costly financial regulations and short-term earnings expectations from Wall Street. With more flexibility, the company could put more money into research and development and other long-term investments.
The company was formed in 2019 as a merger between Portland-based Vets First Choice and the former animal health division of medical and dental products supplier Henry Schein Inc. of Melville, New York. Covetrus has roughly 5,700 employees in 25 countries. The company provides veterinary products, office management, customer service and prescription technology for independent veterinary offices.
Vets First Choice was founded in 2010 by Benjamin Shaw and his father, Idexx founder David Shaw, who initially served as chairman of Covetrus' board.
About 1,600 full-time employees are employed by Covetrus in North America, but the company would not say how many workers it has in Maine. In the past, it has cited a figure of roughly 300 Maine workers but said it planned to grow that number to 1,200.
Covetrus' early promise was shaken by first-year earnings that fell short of analyst expectations and a lawsuit that accused key executives of misleading investors and inflating the company's share price. A number of its top executives, including Benjamin Shaw, departed the company in the aftermath.
