2. Disclaimer
Legal Warning
This presentation was prepared in order to allow a better understanding, by the market, about the binding Memorandum of Understandings entered into by
and between Brazil Pharma S.A. (“Brazil Pharma”) and the quotaholders of the pharmaceutical retail chain Big Ben (“Big Ben Group” and, together with
Brazil Pharma, jointly referred to as “Parties”), regarding the acquisition of all the retail operation of pharmaceutical products of Big Ben Group
(“Transaction”).
This presentation comprises certain statements regarding future events and information related to Big Ben Group that reflect the current vision and/or
expectations of Big Ben Group 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 – Brazil Pharma’s CEO
Renato Lobo – Brazil Pharma’s Investor Relations Officer
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4. Agenda
1 Big Ben Overview
2 Transaction Rationale
3 Transaction Analysis
4 Brazil Pharma Post Acquisition
5 Hidden Values
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5. Big Ben Overview
Besides being the leader in Brazil’s northern region, Big Ben presents high levels of sales per store with
a solid growth towards the northeast region over the past years
Big Ben Sales Breakdown
Founded in 1994, with head offices in the state of Pará; 2010
CEO and Founder : Raul Aguilera;
Brazil’s 8th largest drugstore chain;
Largest drugstore chain in Brazil’s northern region, 68% top of
Brand medicine
mind in the state of Pará, according to “Diário do Pará”;
42%
146 stores in the states of Pará, Maranhão, Amapá, Piauí, 50% Generic medicine
Pernambuco and Paraíba; (1)
50 stores in the northeast region; Non-medicine
8%
24% of stores are under maturation;
Sales per store of approximately R$500 thousand/month; (2)
Sales in 2010: R$712.4 million; and
Stores per State
EBITDA in 2010 : R$40.2 million. October 31 , 2011
Pará 95 stores
Amapá 1 store
Maranhão 20 stores
Piauí 14 stores
Pernambuco 14 stores
Paraíba 2 stores
(1) As of October 31, 2011
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(2) Average sales per store recorded in 2011
6. Transaction Rationale
1st Consolidates leadership position in the northern region;
2nd Establishes a top position in the northeast region, with higher concentration of stores per
state compared to the top player;
Regional
leadership 68% Top of Mind in the state of Pará (Diário do Pará);
(1)
Strengthen market position in the northeast region with 112 stores ; and
Acquisition of a leading player in the northern region mitigates execution risk.
Northern and northeast regions record higher population and income growth rates;
Fragmented regional market, with lower competition and lack of a large player in the entire
region; and
Growth Potential
First large chain to set position in the northern region with complementary footprint
compared to other chains.
Higher purchase volume allowing better relationship with the industry;
Take full advantage of POS by using our Private Label; and
Synergies
Capture administrative and operational synergies.
Partner’s Raul Aguilera has over 25 years of experience in the drugstore sector; and
experience
Opening of 12 stores per year over the past 3 years, on average.
(1) As of June 30, 2011
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7. Transaction Analysis
The acquisition has a cash component and a share issuance.
R$275.0 million
11,906,667 shares
100% shares
Transaction Highlights
Total acquisition amount of R$453,644,000.00(1) EV/EBITDA 2011E
• R$178.6 million in Brazil Pharma shares, issued at a price of R$15 per share; Transaction Multiple: 8.3 x
• R$100.9 million in cash; and
• R$174.1 million in 3 annual installments, adjusted by IGP-M (General Market Price Index).
Indemnity and Sureties
• Last installment in cash and equity interest in Brazil Pharma will be secured by indemnities as contractually agreed.
Corporate Governance
• Raul Aguilera remains as Big Ben’s CEO with 3-year renewable management contract; and
• 3-year lock-up for issued shares.
(1) Includes transaction fees.
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8. Brazil Pharma Post Acquisition
(1)
With the transaction, Brazil Pharma becomes Brazil’s third largest drugstore chain with 466 own stores.
(1) (1)
Brazil Pharma Overview New Geographic Footprint (2Q11)
Foundation: 2009;
Employees: 12,886;
Head offices: São Paulo – SP;
+
206 own stores
Points of Sale (2Q11 Pro-forma): 824;
Retailing of pharmaceutical products, hygiene, beauty and
wellbeing items;
Targeting of A, B and C classes;
Operates in regions of higher growth.
Portfolio post transaction:
– 466 own stores and 358 franchise stores;
– 4 distribution centers (Belém, Recife, Canoas and
Brasília).
92 own stores
The Company will operate in 15 Brazilian states throughout
all the regions;
Higher growth potential; and
358 franchise stores
Higher mix of generic and non-medicine products.
168 own stores
(1) As of June 30, 2011
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9. Brazil Pharma Post Acquisition
Consolidation as the main player outside São Paulo, with great representativeness in the northern and
northeast regions, which record Brazil’s highest growth rates.
(1)
Strategic Highlights Sales Concentration
Largest drugstore chain in the northern region; 12,7%
Second largest drugstore chain in the northeast region, with
higher concentration per state compared to the region’s 51,5%
40,5%
leader;
Largest drugstore chain in the mid-west region;
22,5%
Second largest drugstore chain in the southern region; and
46,8%
Higher concentration of allocated capital in the northern and 26,0%
northeast regions which presents higher population and
income growth rates. Before Acquisition Post Acquisition
South Mid-west North/Northeast
Stores Concentration (1) Stores Concentration (1)
19,5%
PA 93 93
Northern 44,2%
AP 1 1
AL 5 5 28,5%
MA 20 20
PI 14 14 Northeast 19,7%
PE 55 13 68
PB 3 2 5 52,0%
DF 85 85 36,1%
Mid-West
GO 7 7
SC 3 3
Southern Before Acquisition Post Acquisition
RS 165 165
South Mid-west North/Northeast
Total 168 92 63 143 466 Brazil
(1) As of June 30, 2011
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10. Brazil Pharma Post Acquisition
In only 2 years of operations, Brazil Pharma...
(1) (5)
Financial Combined
LTM
801.6 1,023.3 1,824.8
Sales
Gross Profit 252.9 324.9 577.8
Gross Margin 31.5% 31.7% 31.7%
EBITDA 41.9 50.7 92.6
EBITDA Margin 5.2% 5.0% 5.1%
Net Income 19.8 23.0 42.8
Net Margin 2.5% 2.2% 2.3%
Indebtedness (1)
(4)
Gross Debt 68.0(2) 228.2 (3) 296.2
(2) (3) (4)
Cash and cash equivalents (46.6) (456.3) (502.9)
(2) (3) (4)
Net Debt 21.4 (228.0) (206.6)
Operational (3)
Number of stores 143 323 466.0
Number of employees 3,681 9,205 12,886.0
Total Sales Area 37.1(6) 49.5 (6)
86.6
(1) Last twelve months ended June 30, 2011;
(2) As of October 31, 2011;
(3) As of June 30, 2011;
(4) Does not consider transaction’s disbursement;
(5) Values in R$ million; and
(6) Thousand square meters. 10
11. Brazil Pharma Post Acquisition
Ownership structure post acquisition.
Aguilera BTG Operating
FIPs1 Market
Family Pactual Partners
12.98% 30.33% 11.83% 20.41% 24.45%
100.0% 100.0% 100.0% 100.0% 100.0%
Rosário Mais
Big Ben Farmais Guararapes
Distrital Econômica
(1) Assets managed by Banco BTG Pactual.
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12. Hidden Values
The new acquisition brings to Brazil Pharma several opportunities to create value.
Operational Efficiency Relationship with the
industry
With the implementation
of Shares Services Brazil Pharma’s sales will
Center, we will increase reach approximately R$2
Big Ben’s operational billion, increasing its
efficiency, increasing its bargaining power with the
EBITDA. industry.
Private Label/ New
Businesses Organic Growth
Increase of nearly 50% Higher scale and strength
new potential clients from to speed up growth in the
our Private Label and northern and northeast
New Businesses. regions
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13. 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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