Shares in EBOS Group rallied sharply after the medical products distributor successfully raised $674 million from a share placement to partly fund the A$1.17 billion purchase of Australia's LifeHealthcare.
The issue price of $34.50 represented a 5.5 per cent discount to the closing price on NZX of $36.50 per share on Wednesday.
The sharemarket easily absorbed the extra stock, and EBOS Group's share price rallied by 90c or 2.5 per cent to $37.40 when trade resumed this morning.
The deal is in the same league as EBOS Group's $1.1 billion purchase of Zuellig Healthcare Holdings Australia Pty (Symbion) in 2013.
EBOS said today the placement was strongly supported by a broad range of existing and new investors across New Zealand, Australia and offshore.
Harbour Asset Management portfolio manager Shane Solly said the capital raise was well sought, with investors scrambling to get stock.
"The LifeHealthcare transaction underpins EBOS' growth for the next decade – similar to the 2013 Symbion acquisition provide the basis for EBOS last eight years of consistent market-beating earnings growth," he said.
Brokers Jarden maintained its "overweight" rating on EBOS, based its market positions and its track record of successful mergers and acquisitions.
"We also like EBOS seeking the opportunity to build a leadership position in Australia and New Zealand medical devices, which remains an attractive growth sector, and the proposed transaction also opening up Asia as a geographic expansion play," Jarden said in a report.
EBOS chief executive John Cullity said the company had been encouraged by the strong support from investors for the placement and in particular, the level of support from existing shareholders.
He said the acquisition would accelerate EBOS' medical devices strategy and would create a platform for the company to capitalise on additional future growth opportunities.
The purchase comprises 100 per cent of LifeHealthcare's Australian and New Zealand subsidiaries and 51 per cent of LifeHealthcare's Asian subsidiary, Transmedic, for about A$1.17b ($1.23b).
EBOS said the acquisition will be fully funded through a combination of the proceeds the placement, a retail offer, and a new A$540m term loan debt facility.
In addition, 0.7 million in new EBOS shares issued to LifeHealthcare management.
LifeHealthcare is one of the largest independent distributors of third party medical devices, consumables, capital equipment and in house manufactured all graft material in Australia, New Zealand and South East Asia.
Dual-listed EBOS is Australasia's largest marketer, wholesaler and distributor of healthcare, medical and pharmaceutical products, with annual revenue in excess of A$9b.