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Life Pharmacy - Source: ONE News
Retail pharmacy group Life Pharmacy Ltd has is set to merge with New Zealand's largest pharmacy group Pharmacy Brands Ltd (PBL).
Life Pharmacy says it will make an offer for 100% of PBL's shares via a share swap in which PBL shareholders can receive nearly 40 Life Pharmacy shares for every share they sell.
The offer values Pharamcybrands at $20 million, or $19.55 per share, and Life Pharmacy at $36.2 million.
The proposal would see the two companies merge their operations, with Life Pharmacy saying that the merger would give it the scale and capability to play a major role in reshaping the pharmacy sector in New Zealand.
Market analyst Baden Carter says the move reflects the state of the market in which Life Pharmacy is operating.
"They see the opportunity to consolidate with another company in the face of increasing competition from other retailers and supermarkets, and I'd say they would be looking for scale and cost efficiencies to move forward," he says.
The new company would have around 30 partly owned pharmacies and 220 franchised pharmacies across New Zealand.
PBL's stores include Unichem, Amcal and the Dispensary First chemist brands.
PBL is majority owned by Cape Healthcare Ltd with 66.1%. Together with PBL's directors they hold nearly 69% of the company and have agreed to swap their shares when Life Pharmacy's offer is made.
PBL's board is recommending shareholders take up the offer.
As part of the offer, Life Pharmacy will buy back $4.2 million of its shares.
The new merged company board would be comprised of the two companies' existing boards.
