Brazil Pharma Continues Consolidation

Brazil Pharma continues its consolidation push after agreeing to acquire Sant’ana Drogaria Farmacias in a three-step transaction that values Sant’ana at BRL495.7m ($288.3m). Initially, Brazil Pharma, through its Farmais subsidiary, will acquire a 70% stake in Sant’ana in a BRL347m transaction, Brazil Pharma says. Of the total amount, BRL247m will be paid in cash and the remaining BRL100m will be held as collateral to cover any contingency. The remaining amount will be released to sellers of Sant’ana 4 years after the deal closes. Following this acquisition, Farmais will acquire the remaining 30% of Sant’ana shares left, making Sant’ana shareholders new shareholders in Farmais, the company says. In a third step, Brazil Pharma will merge all shares of Farmais and give former Sant’ana shareholders 15m newly issued ordinary shares, marking a capital increase of BRL150m, according to Brazil Pharma estimates. The holders of these new shares will be expected to hold them under a lock-up agreement for 3 years. Officials at Brazil Pharma did not return calls for comment. Sant’ana officials could not immediately be reached for additional details. The deal comes 3 months after BTG Pactual-controlled Brazil Pharma bought rival Big Ben in a deal valued at BRL453.6m ($259.4m).