Bunzl sells UK healthcare business and buys four companies

Bunzl sells UK healthcare division but extends substantial acquisition spree by acquiring four more businesses

  • Pharmaceutical supplier Mediq had agreed to buy Bunzl’s UK healthcare arm
  • Bunzl recently completed the purchase of Czech Republic-based VM Footwear
  • The blue-chip company is expected to publish strong full-year results tomorrow 

Consumer goods distributor Bunzl has reached agreements to sell its British healthcare arm and buy another four companies.

The blue-chip listed firm has been on an extensive acquisition spree in the past two years, adding 11 businesses to its portfolio this year and spending more than £500million taking over an additional 14 in 2021.

On Tuesday, it announced that Dutch pharmaceutical supplier Mediq had agreed to acquire its UK healthcare business, which achieved £216million in turnover last year.

Purchases: Bunzl has been on an extensive acquisition spree in the past two years, adding eleven businesses to its portfolio this year and taking over an additional 14 in 2021 alone

At the height of the Covid-19 pandemic, the division benefited from skyrocketing demand for personal protection equipment like masks, gowns, and visors from the National Health Service.

Demand for these products has slipped back as restrictions have loosened, though this has been partly compensated for by a revival in elective surgeries and stronger demand from the private sector.

But while the group is getting rid of one national healthcare segment, it has recently completed the purchase of two specialist healthcare operators overseas.

In October and November, the company bought Toomac Ophthalmic & Solutions, an ophthalmology products provider based in Auckland, New Zealand, and Australian medical devices distributor GRC.

During the same period, Bunzl took control of VM Footwear, a Czech firm which sells PPE merchandise and makes occupational, high-technology and outdoor shoes.

It also acquired PM Pack, a supplier of packaging and butchery machines in Denmark, whose primary clients are in the food processing industry.

Bunzl said the various deals are anticipated to be profit neutral and provide a modestly positive cash flow.

Frank van Zanten, the company’s chief executive, remarked: ‘Today’s announcement reflects Bunzl’s commitment to optimal capital allocation across the group.

‘The announced acquisitions are highly complementary, expand our product offering in each country, and all achieve double-digit margins, with their profits offsetting the expected profit contribution from the announced disposal.’

The firm’s statement comes a day before it is due to publish its annual trading update, with analysts predicting Bunzl will report pre-tax profits climbing by a fifth year-on-year to £689million, according to online trading platform AJ Bell.

Trading has been assisted significantly during 2022 by higher product prices, a strong performance by its base business and volumes rebounding across the British Isles and Continental Europe. 

Yet the group’s earnings are set to rise only modestly next year due to supply chain disruption and cost inflation that has been worsened by Russia’s full-scale invasion of Ukraine and the Covid-19 pandemic.

Bunzl shares had dropped 0.3 per cent, or 9p, to £28.23 during mid-afternoon on Tuesday, slightly lower than where they were at the start of January.

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