After the market closed yesterday, Virtus Health Limited [ASX:VRT] announced the acquisition of Trianglen Fertility Clinic in Copenhagen, Denmark for up to AU$43 million.
Today, almost as soon as the market opened, Virtus shares were sitting at $5.60 — marking an increase of 1.26%.
So what kind of market magic went on in this acquisition?
Who are Virtus Health?
They’re Australia’s largest Assisted Reproductive Services (ARS) provider, and their presence in regions like Singapore, UK and of course, Denmark, is slowly increasing.
Their company mission is to bring together leading clinicians, researchers and scientists to offer the best form of fertility treatment and related services. Its diversity of expertise gives Virtus the ability to seek new and more advanced solutions, leading to greater success for their patients.
So, as a highly reputable fertility clinic, it was only time before Trianglen caught Virtus’ attention.
What’s so special about Trianglen?
The convenient location of Trianglen is one of its appealing aspects. Being only 15 minutes out of the Copenhagen city centre, it is easily accessible to the local community.
As such, last financial year saw Trianglen complete almost 1,300 egg-retrieval cycles and over 350 frozen embryo transfers.
This is music to Virtus’ ears.
But more importantly, Trianglen’s current mode of establishment ‘provides a natural cultural fit with Virtus Health and our “Leading Minds, Leading Science” philosophy. This team brings another leading IVF provider delivering specialist fertility care to our growing network,’ says Virtus CEO Sue Channon.
She goes on to say:
‘The acquisition of Trianglen reinforces Virtus’ international growth strategy supporting our vision for diversification and the expansion of the Virtus model in carefully selected international markets.’
It certainly looks like a perfect match.
What does this mean for Virtus?
The current management team at Trianglen will continue their work at the clinic upon this acquisition. But co-operation with the Virtus team is what will drive this new venture towards creating a more powerful business model.
The acquisition is formed on a cash free debt basis that’s 8.1-times the forecast normalised EBITDA for FY18.
And there are many signs pointing towards EPS accretive for Virtus in the upcoming financial year.
Of course, things can change, and obstacles can pop out of nowhere. But for now, at least, this looks like a very smart business move by Virtus.
They’re definitely worth keeping an eye on.
For Money Morning
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