Cropped

Graham & Co. photo

Southern Veterinary Partners moved its headquarters to this building in Birmingham, Alabama, in 2021.

Mission Veterinary Partners and Southern Veterinary Partners are planning a merger that would create one of the largest owners of veterinary practices in the United States.

A definitive deal has yet to be struck, according to a person close to the discussions who spoke on condition of anonymity in advance of any formal announcement.

Word had already spread about the prospective merger, sparking a petition calling on the U.S. government to block any such deal on the grounds it would be anti-competitive. The petition, started on June 28, has gathered 193 signatures as of today. It was created by an unnamed licensed veterinary technician and practice manager.

Southern Veterinary Partners, based in Birmingham, Alabama, has more than 400 practices, while Mission Veterinary Partners, based in Southfield, Michigan, has more than 330, according to their respective websites. The private equity firm Shore Capital Partners is a major investor in both.

A combined company with more than 730 practices would rank high in size among corporate consolidators operating in the U.S. The largest is Mars Inc., with more than 2,000 practices under the brands Banfield, VCA and BluePearl. Other large players include National Veterinary Associates, Vetcor and Thrive, which own more than 1,400, 880 and 380 practices, respectively, according to their websites.

Rapid consolidation in the profession is attracting scrutiny from competition regulators in the U.S. and elsewhere. Since 2017, the U.S. Federal Trade Commission has intervened four times in acquisition deals in the veterinary sphere, though each instance has involved only specialty and emergency hospitals, not general practices. In 2022, for example, it ordered NVA, which is owned by German investor JAB, to offload 11 hospitals and seek pre-approval for any more hospital acquisitions in certain locations.

A merger between Southern and Mission would mark a revival of dealmaking in the veterinary realm after a quiet period caused by a rise in interest rates, which increases the cost of borrowing and can make mergers and acquisitions more expensive.

John Volk, a senior consultant at Chicago-based Brakke Consulting, said Shore Capital combining its investments in Southern and Mission wouldn't come as a surprise. That's because higher interest rates have made it harder for private equity firms to cash out their investments by finding another buyer. By scaling up, they can position themselves to join a public stock exchange.

"Given that it has become harder and harder to recapitalize large operations, it probably makes sense to create one large enough that an IPO is an option," Volk said, referring to an initial public offering.

Volk said it's unlikely that the FTC would block a merger. Mission and Southern, while relatively large, count among a number of mid-sized owners of general practices active in the U.S.