2. Disclaimer
Legal Warning
This presentation was prepared in order to allow a better understanding, by the market, about the Share Purchase Agreement entered into by and between
Brazil Pharma S.A. (“Brazil Pharma”) and the quotaholders of the pharmaceutical retail chain Sant’Ana S.A. Drogarias, Farmácias (“Sant'Ana” and, together
with Brazil Pharma, jointly referred to as “Parties”), regarding the acquisition of all the retail operation of pharmaceutical products of Sant'Ana
(“Transaction”).
This presentation comprises certain statements regarding future events and information related to Sant'Ana that reflect the current vision and/or
expectations of Sant'Ana and its management regarding its performance, business and future events. This presentation comprises certain prospective
representations. Although Brazil Pharma believes that the expectations and hypothesis contained in the prospective declarations are reasonable and have
been based upon current information made available to its management, Brazil Pharma is unable to assure the results or future events. It shall be taken for
granted that the real results may materially diverge from those expressed or implicit in the prospective representations. Future expectations arisen from this
presentation may consider the risks and uncertainties that involve any activities and operations and that are beyond of the Parties’ control (including,
without limitation, political and economic changes, volatility in interest and exchange rates, technological changes, inflation, changes regarding corporate
and tax legislation). In this sense, the projections contained herein may not reflect the exact terms of the reality. The data included in this presentation also
contemplate information obtained through internal researches, market researches, information subject to public domain and business publications and, in
these cases, Brazil Pharma has not checked the accuracy of such data with the respective sources. In this sense, Brazil Pharma does not provide any
warranty regarding the accuracy and integrity of such information, that involves risks and uncertainties and is subject to changes based upon different
factors. Brazil Pharma is not responsible for the accuracy of such information. Brazil Pharma and its controlled entities, as well as its council members,
officers, agents, employees, consultants or representatives, are not responsible for any losses resulting from the information presented and/or contained
within this presentation, or for any loses arisen therefrom, corresponding or specific.
This presentation is not intended to provide the market with sufficient information to analyze the performance of the Parties, as well as is not intended to
contain all the necessary information in this sense, but only to reinforce Brazil Pharma’s commitment with transparency and relationship with its investors.
The present presentation does not substitute or change the information made available as per the terms of the current legislation and regulation.
This presentation and its content are information owned by Brazil Pharma and may not be replicated or circulated, partially or totally, without Brazil
Pharma’s previous written consent.
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3. Presenters
André Sá – CEO
Renato Lobo – Investor Relations Officer
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4. Agenda
1 Sant'Ana Overview
2 Transaction Rationale
3 Transaction Analysis
4 Brazil Pharma Post Acquisition
5 Hidden Values
4
5. Sant'Ana Overview
Sant’Ana is the absolute leader of the state of Bahia, which is the most important state of the
Northeastern region.
(1)
Sant'Ana
Founded in 1945, with head offices in Salvador - Bahia;
CEO and Majority Partner: José Sant’Ana;
Brazil’s 9th largest drugstore chain – according to Abrafarma’s 2011 ranking;
Largest drugstore chain in the state of Bahia, with 63% of top of mind in the regional market, according to “Marketing
Consult”;
101 stores in the states of Bahia, while 33% of the stores still under maturation;
Sales per store of approximately R$470 thousand/month;
In December 2011, Sant’Ana’s Distribution Center of approximately 7,000 m² burned down, since then Sant’Ana has been
operating with 2 Distribution Centers of a total of 2,400 m²; and
R$ 527 million Sales and R$ 36 million EBITDA as of LTM Sep.11.
Sales Breakdown
LTM Sep.11
21%
Branded Medicine
Generics
18% 61%
Non Medicine
(1) As of Pro-forma September 30, 2011.
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6. Transaction Rationale
Acquisition of a leading player in the state of Bahia, the largest state of the Northeast region;
Consolidates the leadership in the two main markets of the Northeast region: Bahia and
Regional Pernambuco, which have 4.4% and 3.0% national market share respectively; (2)
leadership
“Farmacias Sant’Ana” has received the last 17 rewards as Top of Mind from “Marketing
Consult”; and
(1)
Strengthen market position in the northeast region with 226 stores.
Bahia is a very fragmented market, no relevant 2nd player yet in the region, Sant’ Ana is a top
of mind brand in the region;
Growth Potential Net Growth of 33 new stores in the last 3 years; and
Solid growth track record: CAGR of 20% on sales and 14% on number of stores from 3Q08 to
3Q11.
Incorporates “Estrela Galdino” points of sales, acquired by Brazil Pharma in December;
Higher procurement volume allowing better relationship with the industry;
Synergies
(hidden values)
Potential to increase the non medicine products share of Sant’Ana’s sales; and
Potential of administrative and operational synergies.
Partner’s
José Sant’Ana has over 30 years of experience in the drugstore sector.
experience
(1) As of Pro-forma September 30, 2011; and
(2) Source: IMS Health 2011
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7. Transaction Analysis
The acquisition has a cash component and a share issuance.
R$ 347,0 million in cash
15,000,000 shares @ R$10.0
100% shares
Transaction Highlights
Implied EV/EBITDA 2012 E (1)
Total acquisition amount of R$ 497.0 million Transaction Multiples: 8,5x
• R$150.0 million in Brazil Pharma’s shares, issued at a price of R$10. per share;
• R$247.0 million in cash;
• R$100.0 million in cash at the 48th month anniversary, adjusted by IPC-A (Consumer Price Index);
• Up to R$35.0 million of this amount will be conditioned to the achievement of pre settled goals;
• Index Cupon: R$17.2 million; and
• Net Cash: R$14.0 million at the signing date.
Indemnity and Securities
• 100% of previous contingencies will be secured by the former owner as agreed by contract; and
• Forward installment in cash and equity interest in Brazil Pharma will be secured by indemnities.
Corporate Governance
• José Sant’Ana remains as Sant'Ana’s CEO;
• 3-year lock-up for issued shares; and
• 5-year Non-Compete agreement, additionally to the lock-up period.
(1) Considering the present value of the estimated fiscal benefit of the goodwill and the index cupon.
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8. Brazil Pharma Post Acquisition
With the transaction, Brazil Pharma becomes Brazil’s largest drugstore chain outside the Southeast
region.
(1)
Brazil Pharma Overview (1) New Geographic Footprint
Foundation: 2009;
Employees: 15 thousand;
Head offices: São Paulo – SP; 986 points of sale
Points of Sale (Pro-forma): 986; - 627 own stores
- 359 franchise stores
Largest drugstore chain in Brazil, excluding the
Southeast region;
Retailer of pharmaceutical products, hygiene, beauty and 228 own stores
wellbeing items;
Targeting of A, B and C classes;
Operates in regions of high growth;
Portfolio post transaction:
– 627 own stores and 359 franchise stores;
– 5 distribution centers (Salvador, Belém, Recife,
Canoas and Brasília). 101 own stores
The Company will operate in 18 Brazilian states throughout
104 own stores
all the regions and in the D.C.;
Higher growth potential; and
359 franchise stores
Higher mix of generic and non-medicine products.
194 own stores
(1) Number of stores as of Pro-Forma December 31, 2011.
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9. Brazil Pharma Post Acquisition
In only 2 years of operations, Brazil Pharma...
Financial (R$ million)
(1)
Combined
LTM Sep.11
Faturamento
Sales 1.849
1.553 527 2.376
2.080
Lucro Bruto
Gross Profit 611
565 136 747
700
Margem Bruta
Gross Margin 33,1% 25,7% 31,4%
EBITDA
EBITDA 102
82 36 138
118
Margem Margin
EBITDA EBITDA 5,5%
5,3% 6,8% 5,8%
6%
Net Income
Lucro Líquido 10
60 21 31
81
Net Margin
Margem Líquida 0,6%
3,2% 4,0% 1%
3,4%
(1) (2)
Operacional
Numberde Lojasstores
Número of own Próprias 498 101 599
Numberde Funcionários
Número of employees 12.886 2.158 15.044
Totalde Vendas Total m²)
Área sales area (thousand 95 13 108
(1) LTM as of September 30, 2011; and
(2) Without acquisitions expenses after the September 30th, 2011
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10. Brazil Pharma Post Acquisition
Consolidation as the main player outside São Paulo, with great representativeness in the north and
northeast regions, which record Brazil’s highest growth rates.
(1)
Strategic Highlights
Brazil Pharma becomes the largest drugstore chain in Brazil; excluding operations in the Southeast region;
Acquisition of the Largest Drugstore Chain in the state of Bahia, giving plenty of room for growth once there isn´t any strong
competition in the region;
Brazil Pharma´s becomes the second largest drugstore chain in the northeast region, with high chances of becoming the number 1 in
2012;
Consolidates the 10 POS of “Estrela Galdino” in Sant’Ana´s assets and brand;
Reinforces the strategy to be the number 1 player in every region where Brazil Pahrma operates;
Brazil Pharma allocates most of its investments in the North and Northeast region, Brazil fastest growing regions being on
demographics and income level; and
Brazil Pharma becomes the 3rd largest drugstore chain of Brazil.
(1) (1)
Stores Concentration Stores Concentration
PA 94 94
North
AP 1 1
AL 5 5 44,2%
MA 6 6 53,6%
PI 28 28 Northeast
PE 79 79
PB 7 7 20,3%
BA 101 101 16,9%
DF 88 88
Mid
GO 6 6
MT 7 7 West 35,5% 29,5%
SC 2 2
South
RS 175 175
Total 177 101 220 101 599 Brazil Pré Aquisição Pós Aquisição
South Mid West North / Northeast
(1) As of Pro-forma September 30th, 2011.
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11. Brazil Pharma post acquisition
Brazil Pharma condolidates its leadership position in 4 out of the 5 main Brazilian regions, becoming
(1)
Brazil´s largest drugstore retailer excluding Southeast region.
(1)
Ranking – Comparison of the 4th Largests Drugstores Chains in Brazil
North Northeast Mid- West Southeast South
1st
2nd
(2)
3rd n/a
(2) (2) (2) (2) (2)
4th n/a n/a n/a n/a n/a
(1) Ranking by stores considering only the 4 largest drugstore chains of Brazil, data as of September 30, 2011; and
(2) “n/a”: Other players doesn’t have any operating stores in the region.
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12. Brazil Pharma Post Acquisition
(1)
Ownership structure post acquisition.
Sant’ana BTG Sócios
Free Float
Family Pactual(2) Operacionais
7% 39% 31% 23%
100% 100% 100% 100% 100%
Rosário Mais
Sant’ana Big Ben Farmais
Distrital Econômica
(1) Ownership structures considering Big Ben’s acquisition; and
(2)11% representing by assets managed by Banco BTG Pactual.
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13. Hidden Values
The new acquisition brings to Brazil Pharma several opportunities to create value.
Operational Efficiency Relationship with the
industry
Improvement of
Sant'Ana’s operational Brazil Pharma becomes
efficiency, with the the most important
implementation of the Company of
Shared Service Center pharmaceutical retail in its
4 regions of operations.
Private Label/ New
Businesses Best Practices
New potential clients for Cross Selling of best
Private Label division and practices between all the
New Businesses. operations increasing
profitability.
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14. Contact
Investor Relations Brazil Pharma S.A.
Renato Lobo
Investor Relations Officer
ri@brph.com.br
Rua Gomes de Carvalho, 1629
(55 11) 2117 -5200
6º e 7º andares
CEP 04547-006
www.brazilpharma.com.br/ri São Paulo, SP, Brazil
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