UDG moves mergers and acquisitions scouts to US

UDG Healthcare hopes to gain “additional visibility” on acquisition targets over the coming months with it relocating its mergers and acquisitions team to the US this summer.

The Dublin-based diversified healthcare services group generates 70% of its earnings in the US and Britain. Yesterday, it reiterated it has up to €100m to spend on acquisitions, with a good pipeline of potential targets being considered.

Further bolt-on buys are most likely being targeted for the group’s Ashfield Commercial & Medical Services contract sales outsourcing unit in the US, but UDG also has targets in existing European territories and expansion in emerging markets particularly China on its radar.

Yesterday, saw UDG improve its full-year earnings outlook on the back of a strong set of first half results covering the six months to the end of March.

Firs- half group revenue was up 9%, year-on-year, at just over €1.13bn and adjusted pre-tax profit rose by 26% to €46.6m. Revenue in the Ashfield unit grew 35%, year-on-year, with profits up 55% at €25.9m. Sharp Packaging Services, UDG’s contract packaging division, increased sales by 35% and profit by 57%. While acquisition contributions helped, organic sales at those two divisions increased by a combined 16%.

The two arms now have more than 70% of UDG’s group profits. Management has increased its guidance for adjusted diluted earnings per share growth from a 5%-8% range to 7%-9%.

Despite an exceptional charge of nearly €11m for its healthcare communications restructuring, modest debt levels and strong financing facilities mean UDG is well-positioned for growth, says management.