ParagonCare merges with CH2 to create Asia Pacific healthcare powerhouse

Medical equipment maker ParagonCare (ASX: PGC) has announced a “transformative” merger with CH2 Holdings to create a premier healthcare wholesaler, distributor and manufacturer operating across growing markets in the Asia Pacific region.

The proposed merger signals a strategic move to capitalise on combined operational capabilities and will enable ParagonCare to expand into new networks across Australia, New Zealand and Asia including Singapore, Malaysia and Indonesia.

Under the terms of the proposal, ParagonCare will acquire CH2 Holdings in exchange for the issue of 943.5 million of its own shares to CH2 investors.

The deal implies a purchase price of $201.4m based on a share price of $0.214 and will equate to 57% of ParagonCare’s issued shares on completion.

Expected proforma revenue of the merged entity for the 2024 financial year is approximately $3.3 billion, while earnings before interest, taxation, depreciation and amortisation sit at $93m.

The deal will generate synergies and annual cost efficiencies of more than $5m.

‘Transformative’ transaction

Paragon chief executive officer John Walstab said the merger represented a significant transaction for the company which would create a diversified and complementary healthcare group.

“This proposes to be a transformative transaction for ParagonCare, providing greater scale and opening avenues for further growth,” he said.

“[Our] respective capabilities provide a compelling prospect that will enhance the customer experience and drive shareholder value,” he said.

Leading distributor

The combined entity is expected to become a leading independent healthcare distributor in Australia with comprehensive infrastructure to offer customers a cost-effective suite of healthcare solutions.

It would provide a quality range of products based on convenience and consistency to a broad customer base as well as cross-selling opportunities across both businesses.

For business partners, the merger will provide opportunities to capitalise on supply chain efficiencies and access a full range of products and support in existing and new markets across the Asia Pacific.

The combined entity will be led by an experienced board and senior management team to drive long-term growth and value creation.

The new board will be comprised of CH2’s three current directors, two independent directors and Mr Walstab.