What happened
Mars, the fourth-largest privately held company in the U.S., has agreed to buy the pet diagnostics and specialty products company Heska (HSKA) for $120 per share. In response to this news, the stock was up by a hefty 20.6% on heavy volume as of 10:50 a.m. ET Monday.
This buyout agreement represents a 23% premium relative to Heska's closing price last Friday. The two companies expect the transaction to close in the second half of 2023, according to the press release.
So what
Through this deal, Mars will gain Heska's rapidly growing suite of pet diagnostics products, which are quickly becoming an integral part of the veteinary practices across a wide range of geographies. Once the transaction closes, Heska will become part of Mars Petcare, a subsidiary that the multinational conglomerate has been steadily building out since 2007.
More broadly, this buyout of Heska speaks to the enormous growth potential that business leaders expect from the pet healthcare space in the coming years. A recent report from Grand View Research, for example, pegged the industry's compound annual growth at a staggering 11.2% over the course of 2022 to 2030. In light of this sizable commercial opportunity, it's not surprising to see Heska being bought out by one of the industry's biggest names.
Now what
The pet care and supply space is one of the fastest growing industries in the world. As a result, larger companies will likely continue to be active in mergers and acquisitions over the next few years. This puts a spotlight on other publicly traded pet suppliers like Chewy and Petco, among others.
