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Vets First Choice to merge with spinoff of Fortune 500 company

BY James McCarthy

4/23/2018
Photo / Tim Greenway
Photo / Tim Greenway
Benjamin Shaw, founder and CEO of Vets First Choice. The Portland-based company, founded in 2010, announced today plans to merge with a spinoff of Henry Schein Inc., with the new company to be publicly traded and headquartered in Portland under the name of Vets First Corp.

Henry Schein Inc. (Nasdaq: HSIC) and Vets First Choice announced today plans for Henry Schein to spin off its animal health business and merge it with Vets First Choice, creating an independent publicly traded company.
Vets First Choice, founded in Portland in 2010, has more than 750 employees in the United States and 5,100 veterinary practices on its prescription-management platform.
Benjamin Shaw, founder and CEO of Vets First Choice, will be CEO of what will be known as Vets First Corp., following the merger with a spinoff called Henry Schein Animal Health. Vets First Corp. will remain based in Portland.
David Shaw, chairman of the board and co-founder of Vets First Choice and founder of IDEXX Laboratories Inc., will serve as chairman of Vets First Corp. David Shaw is Benjamin Shaw’s father. Henry Schein shareholders will own 63% of the company and Vets First Choice shareholders will own 37%.
Henry Schein expects to receive between $1.0 billion and $1.25 billion in cash on a tax-free basis as part of the transaction. It will use the proceeds for general corporate purposes, including share repurchases, repayment of indebtedness and acquisition opportunities, according to a news release.
The transaction has been unanimously approved by the boards of Henry Schein and Vets First Choice and is expected to close by year’s end.
“We are early in the life cycle of rapid technological change in the animal health market,” Shaw said in a news release. “This merger creates an enhanced value chain that connects the veterinarian, the manufacturer and the pet owner through insights and analytics that will support better clinical and financial outcomes.”
“For Henry Schein, we believe the transaction benefits our shareholders in two ways,” said Stanley M. Bergman, chairman and CEO of Henry Schein. “We believe Vets First Corp., as an independent public company focused exclusively on animal health, will be well-positioned to achieve a premium valuation in the market. We believe the transaction positions Henry Schein shareholders to benefit from their investment in a more focused dental and medical growth company.”

Henry Schein Inc., with headquarters in Melville, N.Y., has operations or affiliates in 34 countries. It reported record sales of $12.5 billion in 2017 and has 22,000 employees and more than 1 million customers around the world.
The company it plans to spin off, Henry Schein Animal Health, is the world’s largest and only global supply chain provider of animal health products and related services, with market-leading positions in North America, Europe, Australia and New Zealand, according to the news release. It has 4,300 employees and active customers include 75% of veterinarians in the United States and 70% of veterinarians in Europe and Australia and New Zealand.
More than half of U.S. animal health practices currently use Henry Schein’s practice management software platform.

In today’s news release, Vets First Choice and Henry Schein Animal Health said the combined company would be headquartered in Portland.
Founded in 2010, Vets First Choice received a $9 million grant from Maine Technology Institute earlier this year through the Maine Technology Asset Fund that was financed by a $45 million bond approved by voters in June 2017. MTI manages the fund on behalf of the state.
In its announcement at that time, MTI said Vets First Choice planned to build a $20 million corporate facility in Portland. The site, the location of which has not been identified, will include an automated fulfillment center, state-of-the-art specialty pharmacy, and a world-class science, technology, engineering and math center.
It also promises to "create hundreds of high-quality jobs in Maine," though the MTI press release did not specify how many.

Immediately following its spin-off from Henry Schein, HSAH will combine with Vets First Choice to form a new publicly traded company that the news release stated will have combined pro forma 2017 sales of approximately $3.6 billion. The two companies stated they expect “synergies to grow annually such that in year three, operating income synergies for the combined business will be in excess of $100 million, driven largely by accelerated revenue growth from the adoption of the Vets First Choice platform across the HSAH customer base.”
Benjamin Shaw was honored by Mainebiz in 2015 as a Next Award winner. Mainebiz also honored his company that year as one of the fastest growing companies in Maine
Shaw said Vets First Choice, by combining forces with HSAH, would be able to accelerate new and improved “programs, services, and technology to veterinary teams,” adding that “manufacturers will benefit from a global platform to help drive category growth, improved client engagement, and enhanced medication and service compliance.”