Signage for Abbott Laboratories stands at the company’s headquarters in Abbott Park, Illinois. Abbott will buy about 73% of publicly traded CFR from a holding company controlled by the Weinstein family, which founded the company in the 1920s.
Reuters
Abbott Laboratories said on Friday it would acquire Chile’s CFR Pharmaceuticals SA in a $2.9bn deal that will more than double its branded generic drugs business in the fast-growing Latin American market.
This is the first deal for Abbott since it split into two businesses and spun off its blockbuster rheumatoid arthritis drug in a new company, AbbVie, last year and comes at a time when health mergers have surged.
Abbott plans to focus the branded generics business on about 14 or 15 fast-growing countries in emerging markets.
“Not all geographies are alike and some are not particular focuses for us,” Chief Executive Officer Miles White said during a conference call with investors. White said the company was still looking at other transactions.
While the Latin American pharmaceuticals market has been attractive to big drugmakers, there are few other big opportunities like CFR because most companies are small, family-owned businesses.
The pharmaceutical retail and distribution industry does have some larger companies, such as Mexico’s Grupo Casa Saba and Brazil’s Hypermarcas. Earlier this month, Casa Saba sold its Chilean health retail arm, Farmacias Ahumada, to Britain’s Alliance Boots for $638mn.
Abbott will buy about 73% of publicly traded CFR from a holding company controlled by the Weinstein family, which founded the company in the 1920s. It will conduct a tender offer for the remaining shares.
Chile’s antitrust regulator, the so-called National Economic Prosecutor’s Office, said it will study the deal “to evaluate possible anti-competition risks arising from the operation.”
It said there was an overlap of various product lines sold in Chile by both companies, but added that it could not calculate each company’s current market participation or the level of concentration that would result from the operation without first gathering more detailed information.
The move was a surprise to Latin American analysts, who were unaware the company was in the midst of a sale. A few months ago its $1.2bn bid for South Africa’s Adcock Ingram failed.
“This is very surprising,” said Claudia Cavada, senior analyst with Banchile Inversiones in Santiago. “It’s a very good price compared to yesterday’s closing price.”
Abbott will pay 34.65 cents per share, or about 190.54 Chilean pesos. CFR shares closed Thursday at 124.51 pesos and were trading at around 181.5 Chilean pesos on Friday. Abbott stock dipped 0.6% to $39in New York.
JPMorgan analyst Michael Weinstein said in a research note that the move filled a hole while Abbott continues to weigh the sale of its established products business in developed markets.
CFR Pharmaceuticals sells about 1,000 products across Latin America and has 7,000 employees and research and development and manufacturing facilities in Chile, Colombia, Peru and Argentina.
Abbott sells healthcare devices and branded generics in 150 countries and has 69,000 employees. The purchase would add $900mn in sales in 2015. Abbott expects the deal to close in the third quarter and to contribute to sales in the fourth quarter.
Barclays advised Abbott on the transaction and Deutsche Bank Securities advised CFR Pharmaceuticals.
ARC Healthcare near $3.7bn pact for Griffin-American
American Realty Capital Healthcare Trust is in exclusive talks to buy Griffin-American Healthcare REIT II, a deal that could value the healthcare real-estate investment trust at around $3.7bn, according to people familiar with the matter.
American Realty Capital Healthcare Trust – known as ARC Healthcare - is trying to finalise a purchase agreement in the next two weeks with Irvine, California-based Griffin-American, which owns senior housing and nursing facilities, hospitals, medical office buildings and other medicine-related properties in the US and Britain, the people said.
Discussions between the two could still fall apart and Griffin-American could turn to other bidders that remain interested in buying the company, cautioned the people, who asked not to be named because the matter is not public.
Spokesmen for Griffin-American and ARC Healthcare declined to comment.
ARC Healthcare, which was created in 2011 as a non-traded REIT, listed on the Nasdaq market in April this year and has a market capitalization of $1.66bn.
The company is led by executive chairman Nick Schorsch, who also runs much larger American Realty Capital Properties Inc , which has a market capitalisation of just over $10bn.
Under Schorsch, New York-based American Realty Capital Properties (ARCP) has pursued major acquisitions in recent years, including buying Cole Real Estate Investments last year for about $7.2bn to create the largest US net-leased real estate investment trust.
On Friday, ARCP also announced a $1.5bn sale-leaseback transaction for over 500 Red Lobster restaurant properties. In April, the company ended advanced discussions to buy $5bn real estate financing company NorthStar Realty Finance Corp , Reuters previously reported.
Griffin-American is a non-traded REIT, meaning that it must file its financials publicly, but its shares do not trade on a stock exchange. The enterprise value of Griffin-American is about $3.4bn based on its recent quarterly filing with the US Securities and Exchange Commission.
The company has acquired a diverse portfolio of healthcare-related real estate assets comprising medical office buildings, senior housing facilities, hospitals and skilled nursing facilities.
Healthcare REITs have attracted investors hunting for higher yields at a time when interest rates remain low and an ageing population boosts demand for senior care facilities and other medical-related properties.