Global pharmacy, health and beauty retailer and wholesaler Alliance Boots plans to acquire Farmacias Ahumada (FASA), the retail pharmacy business of Mexico-based Grupo Casa Saba S.A.B. de C.V. (Casa Saba).

Alliance Boots, Farmacias Ahumada, FASA, Grupo Casa Saba S.A.B. de C.V., Casa Saba, Latin American drug chains, Farmacias Benavides, Farmacias Ahumada, pharmacy retailer in Mexico, drug chains in Chile, Stefano Pessina, retail pharmacy, Walgreens, AmerisourceBergen, Profarma, Brazil, CVS Caremark, Drogaria Onofre

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Alliance Boots acquiring two chains in Latin America

May 7th, 2014

LONDON – Global pharmacy, health and beauty retailer and wholesaler Alliance Boots plans to acquire Farmacias Ahumada (FASA), the retail pharmacy business of Mexico-based Grupo Casa Saba S.A.B. de C.V. (Casa Saba).

Alliance Boots said Tuesday that the deal, financial terms of which weren't disclosed, will position it in a key growth market.

FASA operates two major Latin American drug chains: Farmacias Benavides and Farmacias Ahumada. Farmacias Benavides is the third-largest pharmacy retailer in Mexico, with around 1,000 stores, and Farmacias Ahumada is one of the three largest drug chains in Chile, with about 400 stores. Their combined revenue is approximately $1.42 billion.

The deal with Casa Saba, which also is a distributor of pharmaceuticals, health and beauty aids, general merchandise and other consumer goods, is expected to close in the third quarter.

"This acquisition will give Alliance Boots a major presence in the attractive Latin American market, one of our priority areas for investment. It is also a further step towards reaching a truly global footprint," Alliance Boots executive chairman Stefano Pessina said in a statement.

"The well-positioned retail pharmacy businesses of Farmacias Ahumada and Farmacias Benavides will be great additions to our group's unique portfolio of retail, product and service brands around the world," Pessina stated. "We are confident in the high potential for sustainable growth and value generation that will be unlocked by this acquisition, including the opportunity for consumers in Mexico and Chile to access for the first time leading Boots product brands, such as our renowned skin care and cosmetics ranges."

Farmacias Ahumada comprises five store formats: Farmacias Ahumada, Native, Farmarebajas, GNC and Guapa. It has stores in 98 cities, primarily in the central region of Chile. FASA is the exclusive master franchise licensee for GNC in Chile and Brazil.

Farmacias Benavides' operating area covers more than Mexican 150 cities — including Mexico City since 2013 — in 21 states and the Federal District.

Under the agreement, Alliance Boots will launch a cash tender offer for the outstanding fully diluted share capital of FASA, whose shares are listed on the Santiago Stock Exchange. Casa Saba has agreed, through a wholly owned subsidiary, to tender its holding of 97.89% of FASA's share capital to the offer. The tender offer will be conditional upon certain customary conditions. FASA owns 95.62% of the outstanding fully diluted share capital of Farmacias Benavides S.A.B. de C.V., the operator of the Farmacias Benavides retail pharmacy business.

The Latin American market recently has drawn rising interest from large pharmacy industry players.

In late March, AmerisourceBergen Corp. announced a deal to acquire a minority stake in Brazilian pharmaceutical wholesaler Profarma Distribuidora de Produtos Farmacêuticos S.A. and enter a joint venture with Profarma for specialty distribution and services. In the retail pharmacy market, Profarma is Brazil's 10th largest drug chain, with 140 stores in Rio de Janeiro and covering a geographic area that corresponds to 93.5% of the country's consumer market for pharmaceuticals. Last year, Profarma became one of the largest mixed distributors in Latin America and the largest in Brazil with the acquisition of the retail chains Drogasmil/Farmalife and Tamoio.

The Profarma deal also adds to the global supply chain opportunities that opened up to AmerisourceBergen via its partnership with Walgreen Co. and Alliance Boots, which was announced in March 2013. At the end of October 2012, Alliance Boots and Walgreens announced the formation of a joint venture, Walgreens Boots Alliance Development GmbH, as part of the strategic partnership they announced in June 2012.

Walgreens rival CVS Caremark Corp. announced in February 2013 that it closed a deal to acquire Drogaria Onofre, a Sao Paulo-based retail drug chain with 44 stores. Onofre is Brazil's eighth-largest drug chain by sales and has stores in Sao Paulo, Rio de Janeiro, Minas Gerais, Espirito Santo and Rio Grande do Sul states.