UK veterinary takeover deal revived by compromise bid

VetPartners agrees to offload eight clinics to Mars to win regulator's blessing for Goddard purchase

Published: August 11, 2022
VIN News Service photo
This veterinary clinic in Stockwell, South London, is among 47 owned by Goddard Veterinary Group, which is in the sights of two corporate consolidators.

The largest remaining independent owner of veterinary practices in the United Kingdom is poised to be bought by a corporate consolidator after a compromise was struck with the country's competition regulator.

Goddard Veterinary Group owns 47 practices, most of them in Greater London, including three speciality and emergency hospitals and 44 smaller clinics.

The family-owned business had agreed last year to be acquired by private-equity-backed consolidator VetPartners, which owns more than 550 practices in the U.K. The country's Competition and Markets Authority (CMA) intervened, maintaining the deal would substantially lessen competition in 11 local geographic areas.

In order to appease the regulator, VetPartners has offered to sell eight of its existing clinics to Linnaeus, which is the British unit of Mars Inc., the largest owner of veterinary practices in the world.

The CMA has welcomed the proposal, saying in a statement that it "currently considers" the divestments to Mars will resolve its concerns, which are centered on local rather than global competition. As a matter of course, though, the regulator has invited public comment on the proposal ahead of finalizing its decision. Submissions are due Aug. 19.

"We have been working closely with the CMA to find potential remedies to the issues they outlined in their findings," Dr. Jo Malone, the chief executive of VetPartners, said in a statement to the VIN News Service.

"Sadly, this has included some of our valued practices and great people no longer being part of the VetPartners family, which is very disappointing. We will continue to fully assist the CMA for ways to resolve the situation."

The bargaining comes at a time when antitrust regulators are more intensely scrutinizing takeovers in a veterinary realm for which ownership has become increasingly concentrated.

The British regulator this year already blocked corporate consolidator CVS Group's acquisition of Quality Pet Care, which owns eight practices in England all branded as The Vet.

In the United States, meanwhile, the Federal Trade Commission in June intervened in two separate takeovers proposed by National Veterinary Associates. The U.S. regulator ordered NVA to divest a combined 11 specialty and emergency hospitals to get approval for its acquisitions of Sage Veterinary Centers and Ethos Veterinary Health.

Such FTC interventions have allowed smaller players such as United Veterinary Care and Veritas Veterinary Partners to snap up divested assets.

The latest intervention in the U.K., however, is a reminder that large consolidators such as Mars can pick up divested assets, too — on the condition that they don't have a large presence in certain neighborhoods.

Mars, through its Linnaeus unit, owns more than 180 veterinary practices in the U.K. and Ireland, but it doesn't own any near the eight VetPartners clinics that it has agreed to acquire.

"The evidence available to the CMA indicates that the acquisition of the divestment business by Linnaeus should not create a realistic prospect of further competition concerns," the regulator said. "Although Linnaeus operates some practices in Greater London, each of Linnaeus' existing practices are in different local areas to each of the divestment business' practices such that there is no local overlap between Linnaeus and the divested sites."

McLean, Virginia-based Mars, a family-owned business otherwise known for making candy, owns more 2,500 clinics worldwide. VetPartners, based in York, England, was acquired in 2018 by private equity firm BC Partners and has expanded into France, Italy, Spain and Switzerland.

The CMA estimated earlier this year that the market share of independent practices in the U.K. had plummeted from 83% in 2013 to 45% in 2021 and has stated that Goddard is the largest independent practice owner left in Britain.

The regulator didn't spell out what it defines as "independent," though the term often is used loosely to describe relatively small, privately-owned businesses that aren't controlled by another, larger company such as an investment firm or conglomerate.

Update: On Sept. 2, 2022, the U.K.'s Competition and Markets Authority granted its final approval for the compromise deal, effectively allowing the acquisition of Goddard Veterinary Group by VetPartners. The full text of the regulator's decision was released on Sept. 12.

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