Ica aquires Sweden’s largest private pharmacy retailer, Apotek Hjärtat.
This gives Ica a market share of 30 percent, and makes it a major tenant at its competitor City Gross and brings back CEO Anders Nyberg to Ica.
“Long term we see just one brand. Apotek Hjärtat is stronger than Cura – but we need to connect Apotek Hjärtat-brand to ICA somehow”, CEO Per Strömberg says – and for the first time reveals the figures for Cura.
Ica Group announced Wednesday it has signed an agreement with Altor Fund III to acquire Apotek Hjärtat, Sweden’s largest private pharmacy retailer, for a consideration of SEK 5.7 billion on a cash and debt free basis. A bigger part of this will be financed by the selling of Ica Norway – and later on the properties in Norway.
The acquisition positions Ica Group as the second largest player in the Swedish pharmacy retail market.
The leading Swedish grocery chain says the transaction provides significant opportunities in an interesting and important sector and creates synergies with other parts of Ica.
“We have since the establishment of Cura pharmacy in 2010 successfully been operating high quality pharmacies that are appreciated by customers. With the acquisition of Apotek Hjärtat, a well-managed company with a strong brand, we increase the scale of this business and see significant opportunities and synergies. We can now provide customers with an even better and more comprehensive product offering within health, medicine and wellbeing, with high standards on safe and effective medication. The transaction benefits ICA’s and Apotek Hjärtat’s customers as well as ICA Gruppen’s shareholders”, says Per Strömberg, CEO of ICA Gruppen.
On a press meeting Wednesday morning Per Strömberg said he believes the HTC-category will increase and the number of self branded goods where Apotek Hjärtat today has a share of 16 percent.
”This is a business we know – and well very comfortable with that.
Apotek Hjärtat and Cura apoteket have combined sales amounting to approximately 11 billion SEK, of which about there billion within personal care. Together, Apotek Hjärtat and Cura pharmacy will have the number two position on the Swedish market with a market share of around 30 percent after Apoteket.
Cura has never been reported as a separate segment – but on Wednesday Per Strömberg revealed the numbers – showing a turnover of 1,7 billion SEK.
”It’s still in a start up-phase with greater costs.”
Apotek Hjärtat has since the re-regulation of the Swedish pharmacy market in November 2009 been growing, mainly by acquiring other chains. Apotek1 and Vårdapoteket are both converted to Apotek Hjärtat. Number three on the market, Kronans Apotek, acquired Medstop last year.
This leaves Apoteket (government owned), Apoteksgruppen (government owned/franchise) and Lloyds (formerly DocMorris) among the bigger players.
Whether Ica will convert Cura till Apotek Hjärtat or the other way around does not tell. Initially Apotek Hjärtat and Cura apoteket will be combined into a separate subsidiary of Ica Group and reported as a separate segment.
”Long term we see only one brand and today Apotek Hjärtat is the stronger brand But we need to see how we can connect it to the Ica-brand. That is a board-discussion.
Three major grocery chains have also special connections to pharmacy chains. Ica started Cura, Coop chose to go with Kronans and City Gross with Apotek Hjärtat. This makes Ica group tenants inside ten City Gross-stores.
The acquisition is expected to generate annual cost synergies to ICA Gruppen of around SEK 80m from 2019. The synergies are mainly related to overhead, purchasing and logistics.
The acquisition will initially be financed using a combination of available cash and existing credit facilities. Completion is subject to the Swedish Competition Authority and Drug Administration approval, expected to be received in April 2015 at the latest.
Anders Nyberg, current CEO of Apotek Hjärtat, is contemplated as CEO of the new entity. On his CV: Vice executive president of ICA between 2005 and 2009.
Before April, Swedish competition authorities and Medical Products agency will have their say.