Shares digital

Shares Rating – Animalcare

1 (low)-5 (high)

Management: 4

Market: 4

Product: 3

Financial strength: 3

TOTAL SCORE: 14/20

Following Ritchey’s acquisition of Genus’ (GNS) veterinary business the company was renamed Animalcare (ANCR:AIM), 13.6 million shares were placed at 55p and the group moved from the Plus market to the main market. Dealings in the new shares started two weeks ago.

The merger was the marriage of two complementary businesses. Ritchey specialised in serving the needs of farmers especially for livestock tags, which are compulsory under EU rules. Animalcare specialises in the companion animal market which is growing by some 8% a year. The combined group will have sales of around £18 million. Although these are currently split 52/48 between the old Ritchey business and companion animal sales, the latter are much the more profitable and will generate almost 70% of group profits.

They will also be the source of most of the group’s growth. When part of Genus the veterinary business was publicly regarded as ‘non-core’ for several years. It is now regarded as the main engine of growth. That should lead to greater investment in NPD than it enjoyed historically.

One of the main targets for growth is generic veterinary drugs. The group is hoping to take advantage of changes in the EU licensing regime for animal drugs which now mirrors that which has been operating for pharmaceuticals for several year. Animalcare will seek to develop generic drugs serving niche markets which should generate good margins but will not be large enough to attract larger competitors.

Management – led by the chairman James Lambert – invested heavily in the placing. Lambert was the very successful CEO of Richmond Foods, which was sold for £160 million. While Animalcare may not enjoy such a stellar performance, it is an established business with growth prospects. Consumers may stint on their own spending but they will not skimp on their pets.