Dechra Pharmaceuticals Plc stock soared after the veterinary drug maker confirmed it is in discussions with EQT AB about a possible all-cash takeover in what could be one of the largest U.K. take-private deals this year.

The U.K.-based company said Swedish investment firm EQT is proposing to pay Dechra investors 4070 pence a share. This equates to a value of about £4.6 billion ($5 billion), and reflects a premium of 51% on the closing stock price on April 12 before news of the potential deal broke.  

Dechra stock rose nearly 40% in early trading in London April 13.

Under U.K. takeover rules, EQT now has until May 11 to make a firm offer, and it’s possible that the private equity arm of the Abu Dhabi Investment Authority will co-invest alongside the Swedish group, Dechra said. The company’s board is prepared to recommend a firm offer to shareholders.

A potential deal for Dechra could be one of the largest take-private transactions in the U.K. so far in 2023, as private equity deal-making has slowed amid a dearth of cheap funding for such deals.
Dechra is a global veterinary supplies company that is best known for making drugs for pets, such as dogs, cats and rabbits. It also caters to the equine market and “food-producing animals,” such as cattle and pigs.

EQT is an acquisitive firm that has been active in the veterinary market. It is the largest shareholder in IVC Evidensia, one of the biggest veterinary service providers in Europe. It also has invested in online retailer ZooPlus and pet insurer ManyPets.

There has been increasing consolidation in the vet market across Europe in recent years. Private equity group BC Partners is currently trying to sell VetPartners, which it bought in 2018.

Founded in 2015, VetPartners specializes in small animal, mixed and equine veterinary practices and operates across the U.K. It has also expanded into Europe under BC Partners’ ownership. The potential sale has attracted interest from a wide range of parties.