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TORONTO, Feb. 23, 2021 /CNW/ - Andlauer Healthcare Group Inc. (TSX: AND) ("AHG") today announced that it has entered into definitive agreements to acquire 100% of Skelton Canada Inc. ("Skelton Canada") and 49% of Skelton USA Inc. ("Skelton USA", and together with Skelton Canada, the "Skelton Companies") for total aggregate consideration of approximately C$114.7 million, subject to customary working capital adjustments (together, the "Acquisitions"). The agreement also includes an option for AHG to acquire the remaining 51% of Skelton USA. AHG expects the Acquisitions to be immediately accretive to cash flow and earnings per share. The Skelton Companies are specialized in the transportation of refrigerated healthcare products.
Since it was founded in 1962, Skelton Canada has grown to be a leading transportation partner to the Canadian pharmaceutical and biologics industry, with nationwide reach and a fleet of approximately 100 vehicles and 120 trailers offering validated temperature control, state-of-the-art security systems and real-time shipment monitoring. Skelton Canada also provides cross-border services into 32 U.S. states from its terminals in Toronto and Montreal. Skelton Canada generated approximately C$11 million of EBITDA in calendar 2020 with margins comparable to AHG.
In response to significant customer demand, Skelton USA was launched in 2017. As a result of pharmaceutical customers "pulling" Skelton USA into the domestic U.S. market, the company has been growing rapidly through successfully leveraging the Skelton Companies' reputation and brand for cold chain expertise. Skelton USA's fleet of approximately 70 tractors and 90 trailers currently serves customers in California, Illinois, Indiana, Georgia, North Carolina and Pennsylvania. Skelton USA generated approximately C$2.5 million of EBITDA in calendar 2020 with significant year-over-year growth but at a lower margin relative to AHG or Skelton Canada.
"We are delighted to welcome the Skelton team to Andlauer Healthcare Group," stated Michael Andlauer, Chief Executive Officer of AHG. "Skelton Canada is one of Canada's leading specialized transportation providers in 2°C to 8°C shipments, and this acquisition will significantly expand our capacity in this area. Our acquisition of a minority interest in Skelton USA allows us to strategically enter the U.S. market by partnering with an existing, well-established operator. I am excited to have the opportunity to continue the Skelton Canada brand and legacy under the AHG umbrella. Skelton shares the same values, the same deep commitment to the customer, and the same commitment to one another as we do at Andlauer Healthcare."
"The Skelton name has always stood for care and commitment to its customers, care and commitment to its employees, and care and commitment to the millions of people that, through its customers, rely on Skelton to ensure the safe and secure delivery of blood products, vaccines, and biologics each and every day. This transaction further enhances our customers' ability to leverage the resources and services that both AHG and Skelton Companies possess, across the entire North American pharmaceutical transportation supply chain," said Ron Skelton, North American President, Skelton Companies.
The Skelton Companies will join AHG's comprehensive platform of dedicated healthcare supply chain solutions and continue to operate independently led by President, North America, Ron Skelton and Vice President, Mike Skelton.
AHG will finance the Acquisitions through a combination of cash on hand and by drawing C$75 million on its credit facilities and issuing C$25 million of AHG subordinate voting shares to the shareholders of the Skelton Companies. In connection with the Acquisitions, AHG has entered into an agreement with its lenders to increase the size of its credit facilities. The amended facilities will now consist of a revolving facility in the aggregate principal amount of up to C$100 million and a term facility in the aggregate principal amount of up to C$50 million.
Closing of the Acquisitions is subject to customary closing conditions, including the receipt of TSX approval in connection with the issuance of the AHG subordinate voting shares. The Acquisitions are expected to close on or around March 1, 2021.
Senior management of Andlauer Healthcare Group will host a conference call for analysts and investors on Thursday, February 25, 2021 at 8:30 a.m. (ET) to discuss the Company's 2020 fourth quarter and year-end results and the Acquisitions. The dial-in numbers for participants are (416) 764-8650 or (888) 664-6383. The call will be webcast live at: www.andlauerhealthcare.com/presentations-events.
Since it was founded in 1962, Skelton Canada has grown to be a leading transportation partner to the Canadian pharmaceutical and biologics industry, with nationwide reach and a fleet of approximately 100 vehicles and 120 trailers offering validated temperature control, state-of-the-art security systems and real-time shipment monitoring. Skelton Canada also provides cross-border services into 32 U.S. states from its terminals in Toronto and Montreal. Skelton Canada generated approximately C$11 million of EBITDA in calendar 2020 with margins comparable to AHG.
In response to significant customer demand, Skelton USA was launched in 2017. As a result of pharmaceutical customers "pulling" Skelton USA into the domestic U.S. market, the company has been growing rapidly through successfully leveraging the Skelton Companies' reputation and brand for cold chain expertise. Skelton USA's fleet of approximately 70 tractors and 90 trailers currently serves customers in California, Illinois, Indiana, Georgia, North Carolina and Pennsylvania. Skelton USA generated approximately C$2.5 million of EBITDA in calendar 2020 with significant year-over-year growth but at a lower margin relative to AHG or Skelton Canada.
"We are delighted to welcome the Skelton team to Andlauer Healthcare Group," stated Michael Andlauer, Chief Executive Officer of AHG. "Skelton Canada is one of Canada's leading specialized transportation providers in 2°C to 8°C shipments, and this acquisition will significantly expand our capacity in this area. Our acquisition of a minority interest in Skelton USA allows us to strategically enter the U.S. market by partnering with an existing, well-established operator. I am excited to have the opportunity to continue the Skelton Canada brand and legacy under the AHG umbrella. Skelton shares the same values, the same deep commitment to the customer, and the same commitment to one another as we do at Andlauer Healthcare."
"The Skelton name has always stood for care and commitment to its customers, care and commitment to its employees, and care and commitment to the millions of people that, through its customers, rely on Skelton to ensure the safe and secure delivery of blood products, vaccines, and biologics each and every day. This transaction further enhances our customers' ability to leverage the resources and services that both AHG and Skelton Companies possess, across the entire North American pharmaceutical transportation supply chain," said Ron Skelton, North American President, Skelton Companies.
The Skelton Companies will join AHG's comprehensive platform of dedicated healthcare supply chain solutions and continue to operate independently led by President, North America, Ron Skelton and Vice President, Mike Skelton.
AHG will finance the Acquisitions through a combination of cash on hand and by drawing C$75 million on its credit facilities and issuing C$25 million of AHG subordinate voting shares to the shareholders of the Skelton Companies. In connection with the Acquisitions, AHG has entered into an agreement with its lenders to increase the size of its credit facilities. The amended facilities will now consist of a revolving facility in the aggregate principal amount of up to C$100 million and a term facility in the aggregate principal amount of up to C$50 million.
Closing of the Acquisitions is subject to customary closing conditions, including the receipt of TSX approval in connection with the issuance of the AHG subordinate voting shares. The Acquisitions are expected to close on or around March 1, 2021.
Senior management of Andlauer Healthcare Group will host a conference call for analysts and investors on Thursday, February 25, 2021 at 8:30 a.m. (ET) to discuss the Company's 2020 fourth quarter and year-end results and the Acquisitions. The dial-in numbers for participants are (416) 764-8650 or (888) 664-6383. The call will be webcast live at: www.andlauerhealthcare.com/presentations-events.
