Brazil’s Farmasa and Hypermarcas Merge

Pharmaceutical company Farmasa and Hypermarcas said they will merge in a transaction valued by analysts at BRL478m. Farmasa is 50% owned by GP Investments, the private equity firm, which purchased the stake in November 2007. The mergers was done entirely through a share swap which leaves Farmasa shareholders holding 39.7m shares in the new company, representing 40%. GP’s stake will be 20%. GP scored a BRL241.6m return on the deal, or a 2x cash on cash multiple, in only seven months, according to Itau Securities. “Once again GP Investments proved its investment and divestment capacities in the best interest of its limited partners,” exclaims the shop, who calculates the post-deal EV/Ebitda multiple is 15.4x, a 53% premium over comparable companies in the US.