Paragon Care is understood to have hired Rothschild & Co as a...

Paragon Care is understood to have hired Rothschild & Co as a defence adviser amid chatter in the market it has been in the cross hairs of EBOS.

There’s talk in the market that Paragon has bidders interested in the business at 40c a share.

Paragon Care shares closed up 2.3 per cent to 22c on Wednesday.

Earlier, Paragon had said that it had not received approaches from EBOS, while both groups declined to comment on Wednesday.

Its market value is $147m.

Paragon Care operates in the areas of specialty diagnostics, specialty devices, capital and consumables, and service and technology under brands such as Designs for Vision, Electro Medical Group, Specialist Medical Supplies and Immulab.

A number of parties have looked at the business in the past and an Asian private equity firm is also said to have been looking.

EBOS has a major earnings hole to fill after the loss of the Chemist Warehouse contract to rival Sigma, responsible for providing $1.1bn annually and 17 per cent of its overall revenue.

As earlier reported by DataRoom, EBOS held talks about a back door listing involving Chemist Warehouse, but instead, the pharmacy giant embarked on the $8bn-plus move through EBOS’ rival Sigma Healthcare.

Shares in Sigma on Wednesday soared a massive 35 per cent on the deal news closing at $1.04.

Market sources say that much of the rally was linked to large cap funds now needing to own the stock given it will now be one of the most dominant consumer stocks on the ASX.

It sets up a trend for next year where equity capital markets will search for alternative structures to get companies to the public market at a time that traditional initial public offerings are struggling to gain support from institutional investors.

Paragon Care’s net profit has increased 61 per cent to $15.6m in the year to June, but its share price has failed to perform after its performance has disappointed investors in the past, particularly with its mergers and acquisitions strategy.

EBOS was in talks to buy the $4bn pet care retailer and vet chain Greencross from TPG Capital, which DataRoom understands was to be accompanied by a $2bn raising.

However, the deal collapsed when it lacked strong investor demand to buy shares in the equity raising.

EBOS, advised by Macquarie Capital, sells pharmacy products wholesale to more than 7000 hospitals as the largest and most diversified Australasian marketer, wholesaler and distributor of healthcare, medical and pharmaceutical products and animal care brands.

Its shares closed down 27c to $33.15.