New Zealand's only listed pharmacy, Life Pharmacy, is about to get substantially larger after its takeover offer for Pharmacybrands Ltd went unconditional yesterday.
The takeover offer was approved by Life Pharmacy shareholders at the company's annual meeting last week.
Pharmacybrands' major shareholder, Cape Healthcare Ltd, which holds 66.11% of the share in that company and represents the interests of Peter Merton and the Zuellig family, has accepted the offer from Life Pharmacy.
Craigs Investment Partners broker Chris Timms said that meant the required shareholder acceptance threshold of 50% of shares had been met.
"It's done and dusted. Once you get the major shareholder across the line, that indicates they think it's a pretty good deal.
"Shareholders will now look to see the benefits appear from the larger entity," he said.
Some of those benefits included the economies of scale around a much larger company which had a "large chunk" of New Zealand's chemists within its brands.
Life Pharmacy could also hedge off its larger buying power and there would be some back-office benefits through better advertising purchasing power and a streamlined management, Mr Timms said.
Pharmacies tended to do well when overall retail sales were strong, but they also proved robust in a downturn as people had to go through the doors to get their prescriptions filled.
"Timing-wise, this is reasonable for them as we are moving into a period where retail sales are increasing. Pharmacies will benefit from any upturn in retail," he said.
The offer valued Pharmacybrands at about $20 million, or $19.55 per Pharmacybrands share, and Life Pharmacy at around $36.2 million.
The company - which also owns the Life Metro, Life Outlet and Care Chemist brands - operates 53 retail outlets nationally, including 29 Life-branded stores, and 24 pharmacies branded Care Chemist.
In 20 of the partly owned businesses, individual pharmacists own 51% and Life Pharmacy has a 49% stake, though another two operations are 50:50 joint ventures.
Now they will be joined by the Unichem and Amcal brands.
Life Pharmacy chairman Mark Vuksich said the merger represented an opportunity to establish an organisation of sufficient scale, strength and capability to play a major role in reshaping the pharmacy sector in New Zealand.
"Both companies have different strengths and combined, we will have a strong platform to deliver superior services to our franchisees and customers."
