01 — The Transaction
The transaction.
Acquisition of Farmacias Ahumada, owner of Farmacias Benavides, by Grupo Casa Saba, financed with US$800 million from HSBC and Banorte. 1,500 drugstores across Mexico, Brazil, Chile and Peru, with estimated pro forma revenue of US$4 billion.
Nov 2009
Approach
Unsolicited talks with the target
Dec 2009
Auction
Winning bid by April 2010
Apr 2010
Financing
Debt and equity through September
Oct 2010
Closing
Acquisition and financing, October 5
Context
A regional drugstore platform
Casa Saba, a leading multi-category pharmaceutical distributor in Mexico, wanted a strategic drugstore platform in Latin America. The acquisition had to be financed on favorable terms, with a plan to repay part of the initial debt quickly and leave a sound capital structure.
01
Execution
Ahead of the auction
The synergies, productivity gains and organic growth available from each major pharmacy chain in the region were analyzed. Farmacias Ahumada was identified as the right target, and its controlling group was approached before it decided to sell through an auction. Through the auction, run for the seller by Goldman Sachs, Casa Saba kept a competitive advantage over the other bidders. Three complex processes ran in parallel: the debt financing, the equity raise and the acquisition itself.
02
Outcome
Acquired and financed
Casa Saba acquired Farmacias Ahumada. The acquisition was financed with a long-term credit from HSBC and Banorte on terms better than the market, and several sources of private equity were accessed. Casa Saba's shares rose about 40% in the months after closing as the market re-rated the company as the leading pharmaceutical play in the region.
03
The standard was set at scale. It is applied every week.
