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Merger of Paragon Care Limited (ParagonCare) and CH2 Holdings Pty Ltd (CH2)
A transformative merger between ParagonCare and CH2 creating a leading healthcare wholesaler, distributor and manufacturer operating across growing healthcare markets in the Asia Pacific region.
ParagonCare is pleased to announce the proposed merger with CH2, establishing a premier healthcare wholesaler, distributor, and manufacturer (Merger).
The Merger enables ParagonCare to facilitate expansion into both existing companies’ healthcare wholesaling and distribution networks across Australia, and New Zealand and Asia
This transformative merger signals a strategic move to capitalise on and strengthen our combined operational capabilities in rapidly growing markets. Merger Highlights
- Combined estimated FY24 pro-forma1 revenues of $3.3 billion and EBITDA of $93 million
- Broad geographic reach with direct operations in 8 countries across Australia, New Zealand and Asia Pacific region
- Significant synergies identified across the business platform
- Experienced management team and Board capitalising on growth in these dynamic growing markets
- Extensive first-tier partner/supplier network - Cross-selling opportunities across both businesses
- Creates a robust framework for both organic and acquisitive growth
- Best-in-class logistics, technology and innovation healthcare solution provider
- Fully integrated and truly independent supplier
- Potential for significant shareholder value creation 1 Based on PGC analyst consensus underlying forecasts, and CH2 forecasts including the full year impact of the Oborne acquisition made by CH2 in February 2024.
Merger Overview
ParagonCare has entered into a share sale agreement dated 29 February 2024 (Share Sale Agreement) to acquire all of the issued share capital in CH2 from Peter Andre Lacaze and Dianne Lacaze as trustees for the Lacaze Family Trust and David Keith Collins and Cherie Maria Millar as trustees for the Collins Millar Family Trust (together, the Sellers).
Under the Merger, it is proposed that ParagonCare will acquire all of the issued share capital in CH2 in exchange for issuing 943,524,071 shares in ParagonCare.
The proposed issue of shares implies a purchase price $201,494,830 assuming a $0.214 share issue price2 and represents 57% of ParagonCare’s issued shares post the Merger completing.
CH2 is a privately owned, Australian based distributor and wholesaler of pharmaceuticals, medical consumables and complementary medicines.
CH2 services a number of key components of the healthcare sector. Paragon and CH2 have identified synergies and cost efficiencies of more than $5 million per annum.
The merged entities expected pro-forma FY24 revenue is approximately $3.3 billion and EBITDA of $93 million3.
The Merger is subject to the approval of ParagonCare shareholders by ordinary resolution (>50%) at a general meeting (Meeting), expected to be held in late May 2024.
The Board unanimously recommends that ParagonCare shareholders vote in favour of the resolutions to be considered at the Meeting in respect of the Merger, in the absence of a superior proposal and subject to an independent expert concluding that the Merger is fair and reasonable to ParagonCare shareholders.
About CH2 CH2 is Australia’s leading national integrated pharmaceutical, nutritional, medical consumables and complementary medicines provider.
CH2 has an 85-year history of providing innovative supply chain solutions to the Australian healthcare industry.
CH2 has built long-standing relationships with major pharmaceutical, OTC, nutritional, medical consumable, complementary medicines, and equipment suppliers to ensure the most comprehensive range is provided to customers.
Strategic and Financial Rationale The Merger represents a significant transaction for ParagonCare and creates an integrated pharmaceutical, medical device, consumable medical products and healthcare capital equipment wholesaler and distributor business across Australia, New Zealand and Asia.
John Walstab, managing director and CEO of ParagonCare, said: “The proposed merger of Paragon Care Limited and CH2 will create a diversified and complementary healthcare distribution and wholesaling group. ParagonCare and CH2’s respective capabilities provide a compelling prospect that will enhance the customer experience and drive shareholder value.
2 Based on the 3 month volume weighted average price of ParagonCare shares up to, but not including, 29 February 2024.
3 Based on PGC analyst consensus underlying forecasts,
and CH2 forecasts including the full year impact of the Oborne acquisition made by CH2 in February 2024.
The current healthcare sector growth surge and longer-term positive prospects underscore the opportunities of this merger.
This proposes to be a transformative transaction for ParagonCare, providing greater scale and opening avenues for further growth.” The Merger has a strong strategic rationale for both ParagonCare and CH2, and includes:
• greater business scale with approximate FY24 pro-forma revenues of $3.3 billion and underlying EBITDA of $93 million;
• utilising an expanded geographic reach with direct operations across the Asia Pacific region, including expansion of CH2’s product offerings into new markets in New Zealand and Asia through ParagonCare’s established infrastructure
• significant expected synergies, including rationalisation of warehousing, offices, IT/ERP systems and corporate expenses
; • an experienced management team and Board to capitalise on these dynamic, growing markets which have significant long term tailwinds; • expanded first-tier partner/supplier network that can be cross-sold across the businesses;
• better support opportunities for both organic and acquisitive growth; and
• the creation of a leading logistics and innovative healthcare solution provider.
Proposed Management and Board Changes
Following completion of the Merger, the Board will comprise of:
• David Collins;
• Carmen Riley;
• Peter Lacaze;
• John Walstab; and
• two independent directors to be nominated. The proposed Board combines CH2 representatives, continuity from ParagonCare and independent directors in accordance with good corporate governance.
In addition, David Collins will be appointed as Chief Executive Officer and Managing Director, and has commented: “This has been a long-term strategic opportunity for CH2 and we are confident ParagonCare and CH2 will be able to provide a fully integrated independent solution which will continue to deliver growth long term for our new group.
The new combined business with its broad portfolio of products and services will bring opportunities for our customers and supply partners to support the diversified and changing needs of the healthcare market.
” Implementation of the Merger To give effect to the Merger, ParagonCare and the Sellers have entered into the Share Sale Agreement. The Share Sale Agreement sets out the key terms and conditions of the Merger. A copy of the Share Sale Agreement is set out in Attachment 1. Under the Share Sale Agreement, among other matters:
The Merger is subject to a number of conditions precedent, including: ‒ the approval of ParagonCare shareholders under item 7 of section 611 of the Corporations Act 2001(Cth) and any other required resolutions at the Meeting; ‒ receipt of all necessary consents, approvals and waivers from ASIC and ASX; ‒ receipt of third-party consents under certain material contracts; and ‒ no material adverse event occurring in respect of either ParagonCare or CH2. • ParagonCare is subject to customary exclusivity obligations, including no-shop, no-talk (subject to a fiduciary out), notification and matching right provisions.
• ParagonCare and the Sellers are subject to break fee and reverse break fee provisions upon the occurrence of specified events.
Ahead of the Meeting, ParagonCare will issue a notice of meeting and explanatory memorandum (NoM) to ParagonCare shareholders. The NoM will set out all information material to ParagonCare shareholders’ decision on how to vote on the shareholder resolutions required for the Merger.
ParagonCare will appoint an independent expert to opine on whether the Merger is fair and reasonable to ParagonCare shareholders. The independent expert’s report will be included in the NoM.
The Sellers will be restricted from dealing with the ParagonCare shares they receive as consideration under the Merger.
The restrictions will apply for 2 years following completion of the Merger, subject to limited exceptions.
The Board unanimously recommends that ParagonCare shareholders vote in favour of the resolutions to be considered at the Meeting in respect of the Merger, in the absence of a superior proposal and subject to an independent expert concluding that the Merger is fair and reasonable to ParagonCare shareholders
. Indicative Transaction Timetable ParagonCare shareholders do not need to take any action at this time.
As discussed above and set out in Attachment
1, the Merger is conditional on a number of matters, including the approval of ParagonCare shareholders at the Meeting.
The Meeting is expected to be held in late May 2024.
The NoM, including the independent expert’s report, is expected to be dispatched to ParagonCare shareholders in late April 2024.
A high level and indicative summary of the Merger’s timetable is set out below, noting these dates are subject to change.
Event Date Dispatch of NoM and independent expert’s report to ParagonCare shareholders Late April 2024 Meeting and shareholder vote Late May 2024 Completion of the Merger Late May 2024
Application For In-Principle Advice ParagonCare has notified ASX of the Merger in accordance with Listing Rule 11.1 and is seeking inprinciple advice regarding the application of Listing Rules 11.1.2 and 11.1.3.
ASX is currently considering the application and has not yet made a decision
. Information Herbert Smith Freehills is acting as legal adviser to ParagonCare. Record Point is acting as financial adviser and Baker McKenzie is acting as
i hold PGC
looks like a reverse take-over to me
let's see if this will involve a Cap. Raise ( like the SIG one did )
A transformative merger between ParagonCare and CH2 creating a leading healthcare wholesaler, distributor and manufacturer operating across growing healthcare markets in the Asia Pacific region.
ParagonCare is pleased to announce the proposed merger with CH2, establishing a premier healthcare wholesaler, distributor, and manufacturer (Merger).
The Merger enables ParagonCare to facilitate expansion into both existing companies’ healthcare wholesaling and distribution networks across Australia, and New Zealand and Asia
This transformative merger signals a strategic move to capitalise on and strengthen our combined operational capabilities in rapidly growing markets. Merger Highlights
- Combined estimated FY24 pro-forma1 revenues of $3.3 billion and EBITDA of $93 million
- Broad geographic reach with direct operations in 8 countries across Australia, New Zealand and Asia Pacific region
- Significant synergies identified across the business platform
- Experienced management team and Board capitalising on growth in these dynamic growing markets
- Extensive first-tier partner/supplier network - Cross-selling opportunities across both businesses
- Creates a robust framework for both organic and acquisitive growth
- Best-in-class logistics, technology and innovation healthcare solution provider
- Fully integrated and truly independent supplier
- Potential for significant shareholder value creation 1 Based on PGC analyst consensus underlying forecasts, and CH2 forecasts including the full year impact of the Oborne acquisition made by CH2 in February 2024.
Merger Overview
ParagonCare has entered into a share sale agreement dated 29 February 2024 (Share Sale Agreement) to acquire all of the issued share capital in CH2 from Peter Andre Lacaze and Dianne Lacaze as trustees for the Lacaze Family Trust and David Keith Collins and Cherie Maria Millar as trustees for the Collins Millar Family Trust (together, the Sellers).
Under the Merger, it is proposed that ParagonCare will acquire all of the issued share capital in CH2 in exchange for issuing 943,524,071 shares in ParagonCare.
The proposed issue of shares implies a purchase price $201,494,830 assuming a $0.214 share issue price2 and represents 57% of ParagonCare’s issued shares post the Merger completing.
CH2 is a privately owned, Australian based distributor and wholesaler of pharmaceuticals, medical consumables and complementary medicines.
CH2 services a number of key components of the healthcare sector. Paragon and CH2 have identified synergies and cost efficiencies of more than $5 million per annum.
The merged entities expected pro-forma FY24 revenue is approximately $3.3 billion and EBITDA of $93 million3.
The Merger is subject to the approval of ParagonCare shareholders by ordinary resolution (>50%) at a general meeting (Meeting), expected to be held in late May 2024.
The Board unanimously recommends that ParagonCare shareholders vote in favour of the resolutions to be considered at the Meeting in respect of the Merger, in the absence of a superior proposal and subject to an independent expert concluding that the Merger is fair and reasonable to ParagonCare shareholders.
About CH2 CH2 is Australia’s leading national integrated pharmaceutical, nutritional, medical consumables and complementary medicines provider.
CH2 has an 85-year history of providing innovative supply chain solutions to the Australian healthcare industry.
CH2 has built long-standing relationships with major pharmaceutical, OTC, nutritional, medical consumable, complementary medicines, and equipment suppliers to ensure the most comprehensive range is provided to customers.
Strategic and Financial Rationale The Merger represents a significant transaction for ParagonCare and creates an integrated pharmaceutical, medical device, consumable medical products and healthcare capital equipment wholesaler and distributor business across Australia, New Zealand and Asia.
John Walstab, managing director and CEO of ParagonCare, said: “The proposed merger of Paragon Care Limited and CH2 will create a diversified and complementary healthcare distribution and wholesaling group. ParagonCare and CH2’s respective capabilities provide a compelling prospect that will enhance the customer experience and drive shareholder value.
2 Based on the 3 month volume weighted average price of ParagonCare shares up to, but not including, 29 February 2024.
3 Based on PGC analyst consensus underlying forecasts,
and CH2 forecasts including the full year impact of the Oborne acquisition made by CH2 in February 2024.
The current healthcare sector growth surge and longer-term positive prospects underscore the opportunities of this merger.
This proposes to be a transformative transaction for ParagonCare, providing greater scale and opening avenues for further growth.” The Merger has a strong strategic rationale for both ParagonCare and CH2, and includes:
• greater business scale with approximate FY24 pro-forma revenues of $3.3 billion and underlying EBITDA of $93 million;
• utilising an expanded geographic reach with direct operations across the Asia Pacific region, including expansion of CH2’s product offerings into new markets in New Zealand and Asia through ParagonCare’s established infrastructure
• significant expected synergies, including rationalisation of warehousing, offices, IT/ERP systems and corporate expenses
; • an experienced management team and Board to capitalise on these dynamic, growing markets which have significant long term tailwinds; • expanded first-tier partner/supplier network that can be cross-sold across the businesses;
• better support opportunities for both organic and acquisitive growth; and
• the creation of a leading logistics and innovative healthcare solution provider.
Proposed Management and Board Changes
Following completion of the Merger, the Board will comprise of:
• David Collins;
• Carmen Riley;
• Peter Lacaze;
• John Walstab; and
• two independent directors to be nominated. The proposed Board combines CH2 representatives, continuity from ParagonCare and independent directors in accordance with good corporate governance.
In addition, David Collins will be appointed as Chief Executive Officer and Managing Director, and has commented: “This has been a long-term strategic opportunity for CH2 and we are confident ParagonCare and CH2 will be able to provide a fully integrated independent solution which will continue to deliver growth long term for our new group.
The new combined business with its broad portfolio of products and services will bring opportunities for our customers and supply partners to support the diversified and changing needs of the healthcare market.
” Implementation of the Merger To give effect to the Merger, ParagonCare and the Sellers have entered into the Share Sale Agreement. The Share Sale Agreement sets out the key terms and conditions of the Merger. A copy of the Share Sale Agreement is set out in Attachment 1. Under the Share Sale Agreement, among other matters:
The Merger is subject to a number of conditions precedent, including: ‒ the approval of ParagonCare shareholders under item 7 of section 611 of the Corporations Act 2001(Cth) and any other required resolutions at the Meeting; ‒ receipt of all necessary consents, approvals and waivers from ASIC and ASX; ‒ receipt of third-party consents under certain material contracts; and ‒ no material adverse event occurring in respect of either ParagonCare or CH2. • ParagonCare is subject to customary exclusivity obligations, including no-shop, no-talk (subject to a fiduciary out), notification and matching right provisions.
• ParagonCare and the Sellers are subject to break fee and reverse break fee provisions upon the occurrence of specified events.
Ahead of the Meeting, ParagonCare will issue a notice of meeting and explanatory memorandum (NoM) to ParagonCare shareholders. The NoM will set out all information material to ParagonCare shareholders’ decision on how to vote on the shareholder resolutions required for the Merger.
ParagonCare will appoint an independent expert to opine on whether the Merger is fair and reasonable to ParagonCare shareholders. The independent expert’s report will be included in the NoM.
The Sellers will be restricted from dealing with the ParagonCare shares they receive as consideration under the Merger.
The restrictions will apply for 2 years following completion of the Merger, subject to limited exceptions.
The Board unanimously recommends that ParagonCare shareholders vote in favour of the resolutions to be considered at the Meeting in respect of the Merger, in the absence of a superior proposal and subject to an independent expert concluding that the Merger is fair and reasonable to ParagonCare shareholders
. Indicative Transaction Timetable ParagonCare shareholders do not need to take any action at this time.
As discussed above and set out in Attachment
1, the Merger is conditional on a number of matters, including the approval of ParagonCare shareholders at the Meeting.
The Meeting is expected to be held in late May 2024.
The NoM, including the independent expert’s report, is expected to be dispatched to ParagonCare shareholders in late April 2024.
A high level and indicative summary of the Merger’s timetable is set out below, noting these dates are subject to change.
Event Date Dispatch of NoM and independent expert’s report to ParagonCare shareholders Late April 2024 Meeting and shareholder vote Late May 2024 Completion of the Merger Late May 2024
Application For In-Principle Advice ParagonCare has notified ASX of the Merger in accordance with Listing Rule 11.1 and is seeking inprinciple advice regarding the application of Listing Rules 11.1.2 and 11.1.3.
ASX is currently considering the application and has not yet made a decision
. Information Herbert Smith Freehills is acting as legal adviser to ParagonCare. Record Point is acting as financial adviser and Baker McKenzie is acting as
i hold PGC
looks like a reverse take-over to me
let's see if this will involve a Cap. Raise ( like the SIG one did )
GC) (Paragon) is pleased to confirm that the merger with CH2 Holdings Pty Limited (CH2) (Merger) completed on 3 June 2024.
