Partners Group completes around $700m deal for Wedgewood Pharmacy

Partners plans to support the animal health compounding pharmacy with new product development, increased production at the company’s FDA-registered 503B Outsourcing Facility, among other things.

Switzerland’s Partners Group has closed its majority acquisition of Wedgewood Pharmacy in a deal valuing the animal health compounding pharmacy at approximately $700 million, according to sources familiar with the deal terms. 

The deal, originally announced in December, provided an exit for Chicago private equity firm New Harbor Partners, which took a majority stake in June 2016.

Wedgewood, based in Swedesboro, New Jersey, is one of the largest providers of compounded animal medications for acute and chronic conditions in the country. Today the business works with 66,000 veterinarians and serves more than 360,000 pet parents annually. It also prepares compounded medications for the human-health medical specialties of addiction medicine, urology and ophthalmology.

Lincoln International provided sell-side financial advice on the transaction, while William Blair served as international advisor.

Financing for the deal encompasses a $220 million seven-year covenant-lite term loan B via joint bookrunners Macquarie Capital and Natixis, S&P Global reported in February. Financing also includes a $40 million, five-year revolver, S&P said. 

The approximate $700 million valuation was based upon EBITDA of around $40 million to $45 million, sources said. 

Considering that New Harbor targets $10 million to $40 million equity investments in companies with $3 million to $15 million of EBITDA, the firm seemingly made a handsome return on its investment. 

According to the December announcement, Wedgewood nearly tripled in revenues in less than five years. Fueling growth, Wedgwood in 2018 bought its top independent competitor Diamondback Drugs, and in 2020, purchased and began production at Wedgewood Connect, an FDA-registered 503B Outsourcing Facility, in San Jose, California. In the same year, the company acquired Wildlife Pharmaceuticals and ZooPharm, in Colorado and Wyoming, respectively.

From a future growth perspective, Partners said Monday it intends to support new product development, process technology improvements, increased production at the company’s FDA-registered 503B Outsourcing Facility, Wedgewood Connect, as well as logistics and operational investments.

The company also has the opportunity to boost its sales and go-to-market strategy, including via its e-commerce channel, a source said at the time of the agreement.

For Partners, Wedgewood marks the Swiss firm’s second foray into animal health in recent years. 

The firm invested in Blue River Pet Care in mid-2019 in a deal valuing the Chicago veterinary hospital operator between $440 million and $500 million, PE Hub wrote at the time.

Partners and New Harbor declined to comment.