UDG open to buying bigger for right deal, says CEO
HEALTHCARE services group UDG won't shy away from larger acquisitions if the right deal materialises, according to CEO Brendan McAtamney.
The firm announced its latest acquisition yesterday, the purchase of a San Diego-based communications agency for up to $31m (€28.1m).
It brings to $137m (€124.3m) the amount UDG has committed to acquisitions this year. That was for three targets, including the US purchase of Canale Communications announced yesterday.
UDG Healthcare is very lowly geared, with a net debt to ebitda (earnings before interest, tax, depreciation and amortisation) ratio of just 0.4 times. That, combined with strong cash generation, gives it significant headroom to execute acquisitions.
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But Mr McAtamney said the focus for UDG, which is a Ftse-250 company, will remain on smaller acquisitions.
"Rather than do a big bang [acquisition], which has a lot of risk, and frankly can be very much over-priced versus the quality, we like this," Mr McAtamney told the Irish Independent.
"We have bandwidth to do these types of acquisitions. It seems to fit our DNA."
However, he said he "wouldn't avoid" larger deals.
"We've had on-off talks with a lot of companies over the years and there's a variety of scale in those companies," he said.
"If the right opportunity presented itself, I think there would be at least an openness from myself and the board to explore it."
UDG has two units. Its Ashfield division provides communications and advisory services to pharma firms, as well as commercial and clinical services. It also has a pharmaceutical packaging business, Sharp. The group is active in 50 countries.
Despite its balance sheet being lowly leveraged, Mr McAtamney said UDG is not afraid of having more debt.
"We've spent $137m on acquisitions this year and that's kind of been our modus operandi," he said. "We've spent about $500m since 2015 when we sold the supply chain. We think there's a productive home for that money. We're not afraid of debt."
He pointed to UDG's acquisition this year of US-based Putnam Associates for up to $88.6m.
"It was a nice size," he said. "I'd love to do more of those, but some of our best performing assets we bought in at $30m or $40m and are much, much bigger plays today."
Mr McAtamney was speaking as UDG reported strong full-year earnings. Its revenue rose 2pc to $1.3bn on a constant currency basis, while its adjusted operating profit was 9pc higher on the same basis, at $158.4m.