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Macleod Purchase for Neogen

Nikita Sharma

Recently, Neogen Corporation (NEOG) acquired Fort Collins, Colorado-based Macleod Pharmaceuticals. Following the acquisition, the privately-owned Macleod business will be a part of Neogen’s animal safety group.

Macleod, an animal health company, is the original manufacturer of Uniprim, the popular antibiotic drug for horses. The antibiotic is widely distributed across the U.S. Macleod’s exclusive distribution agreement with Bio-Agri Mix has made it possible for Uniprim to be easily available in Canada. The change in ownership will not affect Macleod’s current employees as Neogen plans to retain staff and continue to operate from the Fort Collins facility.

The acquisition is in line with Neogen’s strategy of acquiring allied businesses and developing key alliances. Uniprim will enhance Neogen’s portfolio of professional equine products. It also presents a significant commercial opportunity and is expected to garner incremental revenues for animal safety segment. Revenues from the animal safety segment (43.7% of total revenues) increased 5% year over year to $23.5 million in the first quarter of fiscal 2013.

Neogen has been assiduously expanding its animal safety segment through acquisitions. The company acquired GeneSeek in 2010 to add depth and dynamism to its animal safety segment. In 2012, Neogen acquired Igenity animal genomics business from Merial Limited.

Macleod’s revenues for the last twelve months were roughly $4 million. Neogen witnessed year-over-year revenue growth of 8.8% to $49.7 million in the most recent quarter. Excluding contributions from the Igenity animal genomics business, the company’s revenues edged up 8.1% year over year.

Neogen is a provider of food and animal safety products. The company’s acquisition strategy, sales and marketing capabilities for specific markets and international operations continue to boost its top-line. However, competition from IDEXX Laboratories (IDXX) in certain niche areas remains a headwind.

Neogen currently has a Zacks #3 Rank, which translates into a short-term Hold rating.

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