Pharmacy merger goes ahead

The country's only listed pharmacy group, Life Pharmacy, today went unconditional on its latest acquisition to build a giant retailer in the sector.

It is now committed to taking over Pharmacybrands - the nation's largest retail pharmacy group - and its Amcal and Unichem brands - in an effort to fend off growing competition.

The combined group competes with independently-owned pharmacies, Radius Pharmacies, and smaller groups, as well as supermarkets.

The merged company will have about 30 partly-owned pharmacies, 220 franchised pharmacies and its presence in most towns and cities will give it between 30 per cent and 35 per cent of the market.

The offer valued Pharmacybrands at about $20 million, or $19.55 per Pharmacybrands share, and Life Pharmacy at around $36.2 million.

Pharmacybrands shareholders receive 39.783 LPL shares for every one of their own. The shares will be issued at 49.1c each.

Life Pharmacy, which raised $11.2m in a rights issue last year, used $4.2m of cash to buy back 8,045,958 partly paid ordinary shares.

Life Pharmacy is 50.01 per cent owned by Gulliver's Travel founder Andrew Bagnall. It was looking at Pharmacybrands in April 2007, when it was acquired by Cape Healthcare which bought a 66.1 per cent stake.

Now Bagnall's shareholding in the combined groupwill be around 26.7 per cent, with a similar sized stake held by Cape Healthcare for Peter Merton and the Zuellig family.

Vuksich said the effective merger of Life Pharmacy and Pharmacybrands was a major transformation that provided a platform for future growth and profitability in a sector where pharmacy groups had typically struggled in the past because of a lack of scale.


- NZPA