Maine's largest public company, Covetrus, agrees to be privately acquired for $4B

File photo A newer addition to Portland's Class A office space is 12 Mountfort Street, headquarters for the health sciences company Covetrus.

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By William Hall

Maine’s largest public company, Covetrus Inc. (Nasdaq: CVET), may soon go private in a $4 billion deal announced Wednesday morning.

The Portland-based supplier of veterinary technology and services, launched just three years ago, has agreed to sell to a pair of private equity firms in an all-cash transaction, according to a news release.

Clayton, Dubilier & Rice, headquartered in New York, and San Francisco-based TPG Capital plan to purchase all outstanding stock of Covetrus for $21 a share. That price represents a 39% premium over the average share price for the 30 days ending May 13, the release said.

CD&R already owns 24% of outstanding Covetrus shares.

“This transaction is an important milestone for our company, shareholders, employees, customers and partners,” said Covetrus President and CEO Benjamin Wolin.

“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 health care — for veterinarians across the globe. We appreciate CD&R’s support and their continued commitment to our company and the global veterinary community.”

Covetrus currently has a market capitalization of $2.7 billion. In 2021, the company took in revenues of $4.58 billion, which placed it at No. 643 among the largest public U.S. companies, according to Fortune magazine’s annual rankings, published Monday.

Covetrus is the largest Maine-based public company by revenues, according to the 2022 Mainebiz Book of Lists, and employs 5,700 people worldwide. There are about 1,000 in Portland, where construction of a new, 170,000-square-foot corporate headquarters is nearing completion.

A spokeswoman for CD&R and TPG Capital did not immediately respond to questions about any potential changes for the headquarters project as a result of the deal, although they seem unlikely.

Wolin and the existing Covetrus management team will continue to lead the company, according to the release. The acquisition is expected to close in the second half of 2022, subject to regulatory approvals, conditions and approval of shareholders.

Covetrus was formed in 2019 from the merger of Portland-based Vets First Choice, a veterinary technology company, and the animal-health division of Melville, N.Y.-based Henry Schein Inc. (Nasdaq: HSIC).

Since its launch, Covetrus has undergone a series of leadership changes, including the resignation of founders David Shaw and son Benjamin Shaw, who previously led Vets First Choice. After selling for over $25 a share in their first weeks, shares of Covetrus stock sank below $9 by the fall of 2019.

Wolin took the reigns in early 2020, and the company has been slowly improving its financial performance.

Earlier this month, Covetrus reported first-quarter results including net sales of $1.15 billion, an increase of 4% over the amount during the same period last year. The company also reported a loss of $2 million, or 2 cents a share, down from $16 million, or 11 cents a share, a year ago.

Covetrus' current financial guidance forecasts $270 million to $280 million in adjusted earnings during 2022.

Early on Wednesday, shares of Covetrus were trading at about $20.50, up from Tuesday's close of $19.66.