Medical Disposables buying MoBay rival
Published:Wednesday | June 30, 2021 | 12:08 AMSteven Jackson/Senior Business Reporter
Health supplies distributor Medical Disposables & Supplies Limited, MDS, is acquiring a 60 per cent stake in Cornwall Medical & Dental Supplies Limited from Denise Samuels and Dennis Samuels.
MDS declined to comment on the cost of the acquisition, which is expected to close in early September, but said its ownership of Cornwall, a company based in Montego Bay, would push its net value or capital base beyond $1.1 billion. MDS’s March earnings report is pending but up to December 2020 its capital stood at $846 million.
It will also grow the company’s acquisition staff complement by about one-third to just over 100.
MDS has formed a subsidiary called Cornwall Enterprises Limited to hold the new business. The deal with the Samuelses will expand Kingston-based MDS’s distribution network deeper into western Jamaica, while adding dental distribution and three pharmacies to its portfolio.
Kurt Boothe, who succeeded his mother and was named CEO last November, told the Financial Gleaner that the deal was cash flow positive and accretive – that is, it would add to MDS’s earnings – and would allow the company to grow “sustainably” in the medium term. MDS is family company that went public and listed on the junior market more than seven years ago.
“We have reached the stage in which we had to enact a strategy to grow by inorganic means. As such, we have come to terms with acquiring another industry player. The synergies achieved through the acquisition would be symbiotic, as we could grow together,” said Boothe.
“We have expanded our market share with the acquisition in the medical sphere. But it also gives us entry into the dentistry distribution market. We expect to dominate the distribution of dentist products islandwide through this acquisition,” he added.
Denise Samuels and Dennis Samuels will remain directors of the Cornwall Enterprises subsidiary, while Boothe will become its chairman.
The negotiations for Cornwall began months prior to the onset of the pandemic, which affected global asset valuations. This resulted in an initial suspension of negotiations, but resumed later.
“We wanted to be well positioned for success post-COVID-19. This acquisition allows us to be proactive, to reap post-pandemic success,” said Boothe.
The three pharmacies operated by Cornwall are located at the GWest Centre and on Barnett Street in Montego Bay; and in Savanna-la-Mar, Westmoreland.
“The workers will not be negatively affected by the acquisition,” Boothe said.
MDS does more than $2 billion in sales annually. Its nine-month revenue to December 2020, at $1.76 billion, is tracking ahead of the 2019 period but just by around $40 million. The company has not said how much Cornwall would grow its revenue.