THE Pay less concluded this Monday, the 1st, the acquisition of 99.07% of the network’s share capital extrapharma. The transaction initially estimated at R$700 million was adjusted to BRL 737.75 million due to variations in working capital and net debt position. With the purchase, Pague Menos becomes the second largest pharmacy chain in the country.
According to the notice to the market made by the companies, the first installment, corresponding to 50% of the total amount, was paid today by Pague Menos and the remaining two installments will be disbursed by the Company in August 2023 and August 2024.
With the acquisition, Cearense now has approximately 1,600 stores. The combined revenue of the companies will be more than BRL 10 billion per year.
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About the subject
According to the company, the conclusion of the transaction begins a new cycle in the history of Pague Menos, accelerating its expansion plan by three years and consolidating its leadership in the North and Northeast regions, with approximately 21% market share in the two regions combined, according to IQVIA data, strengthening its position as the largest healthcare services platform in pharmaceutical retail.
“Since the IPO, this is the most important moment for Pague Menos. It summarizes the company’s ability to continue making consistent deliveries and follow its strategic plan even in the face of macroeconomic adversities and changes in the scenario that required quick responses and profound transformations in the companies”, he says. Mario QueirosCEO of Pay Less.
The agreement to purchase Extrafarma by Pague Menos was closed in May 2021 and approved by Cade in June 2022, subject to the execution of a Concentration Control Agreement (“ACC”).
Through the ACC, Pague Menos committed to adopting structural measures in order to eliminate the potential competition concerns pointed out by Cade, which involved the divestment of eight Extrafarma stores, which represent less than 3% of the stores acquired through the Transaction, among other ACC forecasts.
How will the integration of operations work?
The integration of the operations of the companies, which initially maintain the two CNPJs, is based on logistical efficiency, operational convergence, organizational unification and technological integration, as announced by Pague Menos.
The assortment of Extrafarma stores will be expanded and reinforced in the focus categories. Pague Menos will also develop Extrafarma’s own brand to increase its share of sales.
“To obtain gains in logistics, which is among the strengths of the business, the total integration of the operations of the distribution centers and supply routes, with the possibility of improving the assortment, reducing transport costs and greater tax efficiency”.
The plan provides for operational convergence with the standardization and potentialization of improvements in purchasing conditions (cost, time, management of business processes, among others). There will also be the unification of platforms for the operation of Clinic Farma, Digital segment, as well as agreements and partnerships, expanding the universe of benefited customers for both banners.
Extrafarma’s operations team will remain unchanged, being led by the current director of operations, Miguel Jarros, who will now report to the vice president of operations at Pague Menos.
The other corporate departments will be absorbed by the Pague Menos structure, which has already renovated and expanded its office in São Paulo to receive the Extrafarma team.
The two flags will coexist, but Extrafarma’s entire backbone will be migrated to a single IT infrastructure. Expected to be implemented in 8 months, Pague Menos will be supported by Grupo Ultra’s systems until the transition of the technology base is completed.
As of this date, Extrafarma becomes a subsidiary of Pague Menos and the accounting consolidation of the results should take place as of the balance sheet for the third quarter of 2022.
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