Zoetis to buy veterinary diagnostics firm Abaxis for $1.9 billion

Michele Barrett, a dairy technical services veterinarian for Zoetis, can be tasked with managing the health of cows as well as advising clients on the best uses for Zoetis’ products.

Karina Frayter | CNBC

Michele Barrett, a dairy technical services veterinarian for Zoetis, can be tasked with managing the health of cows as well as advising clients on the best uses for Zoetis’ products.

Top animal health company Zoetis will buy Abaxis for $1.9 billion, as the idea looks to capture a bigger slice of the fast-growing market for veterinary diagnostics services.

Zoetis expects the diagnostics category which currently accounts for a little share of its more than $5 billion in annual revenue to grow faster than the animal health-care industry.

The veterinary diagnostics market worldwide can be expected grow to $3.62 billion in 2022 coming from $2.31 billion in 2017, according to research firm MarketsandMarkets.

Abaxis should also help completely new Jersey-based Zoetis lower its reliance on its large animal dermatology business in which faces looming competition coming from smaller firms.

Shares of Abaxis jumped about 15 percent to $82.75 in premarket trading on Wednesday, just shy of Zoetis’ all-cash offer cost of $83 per Abaxis share. The stock has surged 45 percent since the start of the year.

Zoetis will fund the deal through cash as well as completely new debt. the idea expects the deal to close before the end of the year as well as Abaxis to add to its earnings in 2019.

Abaxis provides tools as well as services in which detect, prevent as well as treat animal diseases.

Guggenheim Securities as well as Barclays were Zoetis’ financial advisers, while Piper Jaffray advised Abaxis.

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