. Shares in the target, led by company veteran Ian Page, shot up on Friday but are 6% below the EQT takeout price. Assume the stock would zip back down to its undisturbed price absent a deal, and the current level implies a roughly one-in-five chance that the transaction will fall apart.
That’s too pessimistic. For starters, board directors have backed the deal and committed to tender their, admittedly small, slither of shares. The valuation, at 26 times 2022 EBITDA, seems reasonable. The average equivalent multiple for five recent pet-sector deals is about 24, using data gathered by RBC analysts. And EQT is hardly in a position to pay much more. Breakingviews
in April that the buyer would earn a so-so 17% gross return at the original price, even using very generous growth assumptions. For shareholders in the vet-drug producing target, then, pushing back would leave a nasty scar.