Ebos is paying A$34 million ($36.5m) to buy the LMT and National Surgical businesses in its first foray into the medical devices sector.

"The acquisition provides Ebos with an initial entry point and strong platform for growth into the A$8 billion Australian and New Zealand medical devices sector," the company says in a statement.

Ebos doesn't expect the two businesses to have a material impact on earnings for the year ending June 2020 and they are "expected to meet the group's return-on-capital-employed hurdle of 15 per cent within two years."

Chief executive John Cullity told BusinessDesk that it's typical of a lot of businesses Ebos buys that they're earning less than the hurdle rate at the time of purchase.


"We're very conscious that any acquisition we do has a level of commercial risk but we're quite confident that the investments we make aren't done for the short term."

Ebos had been looking at purchasing a business in the devices space for more than 12 months, he says.

The two businesses were co-founded by Jon Mills and Kerry Lawford 24 years ago and generate about A$40m in annual revenue.

Cullity says the founders will be staying on to manage the businesses under the new ownership, although there's no set period for them to remain.

The earlier statement quoted the founders as saying they "look forward to working with a bigger team with more capital and the ability to leverage Ebos' strong relationships with healthcare networks throughout Australia and New Zealand to provide existing and new customers a wider scope of service."

The businesses provide products and services in the areas of orthopaedic, spine, neuro, ear-nose-and-throat, plastics and sports medicine.

"The acquisition represents an important development in the group's growth trajectory as it is the first step in building another significant platform to our healthcare portfolio," Cullity said a statement.

"Medical device distribution presents a natural adjacency to our existing capability and offers strong economic fundamentals and promising organic growth rates," he says.


"Our strategy is to target specific therapeutic areas focused on 'personalised healthcare,' which means quicker and more effective screening, diagnosis and treatment, leading to a better healthcare service for our communities."

In August, when the company reported a marginal increase in annual net profit to $137.7m, Ebos estimated it had about $300-350m available for acquisitions while keeping debt low.

The company has a long track record of growth through usually small, "bolt-on" purchases, although it has made the occasional large acquisition. It spent $93.6 million on acquisitions in the year ended June.

Ebos told shareholders at its annual meeting today that trading for the September quarter was "in line with our internal expectations and we reconfirm the group is confident of a significant increase in earnings in the current financial year."

It will have the benefit of winning the Chemist Warehouse Group supply contract that kicked in from July 1 and is expected to add about $1b to annual sales.

The company's revenue was $6.9b in the year ended June.

It was chair Mark Waller's last meeting in that role - he had managed the company since 1987 until stepping down in 2014.

Cullity says the meeting gave Waller a standing ovation but the meeting clearly included some friction from shareholders.

The New Zealand Shareholders' Association had complained about a placement to institutions earlier this year which excluded and diluted retail shareholders.

The placement was increased by $25m to $175m because demand was so strong.

NZSA had also given notice that it would be voting íts proxies against the resolution to increase the directors' fee pool by $310,000 to $1.41m because of a lack of information justifying the increase.

The voting results show 10.65 per cent, or more than 5 million shares, were voted against that resolution - NZSA's proxies accounted for about 1.25 million of those votes.

That was in sharp contrast to the resolution electing Stuart McLauchlan to the board that garnered just 0.11 per cent of votes opposed.

Ebos shares closed today at $25.00, up 9 cents, or 0.4 per cent. They have gained about 17 per cent in the past 12 months.