It’s official: CVS Caremark has acquired Brazil’s Onofre. What’s next?
During its fourth quarter conference call on Wednesday, CVS Caremark officially unveiled its foray into the international drug store space with the acquisition of Brazilian retailer Onofre, the eighth-largest drug chain in Brazil.
Now that the other shoe has dropped, what’s next?
While chains are prevalent, Brazil remains a highly fragmented market that is clearly ripe with opportunities thanks, in part, to an aging population, a decline in unemployment and a rise in incomes.
“It’s a maturing marketplace [and] it’s expected to have continued strong growth for the foreseeable future. As people move up the economic ladder, they’re spending more on healthcare as well as education and with increased access to healthcare and pharmacy both are expected to grow over the next several years,” CVS Caremark president and CEO Larry Merlo told analysts during Wednesday morning’s conference call. To be more specific, healthcare and pharmacy are expected grow double-digits for the next decade.
The market in Brazil has been experiencing some consolidation, largely domestic, but some industry observers speculate that the move by CVS Caremark could spark further consolidation.
In fact, Merlo even indicted that, going forward, there could be other opportunities acquisition-wise.
“I think one of the other keys for us is the market is recessive to chain pharmacy. Chains are pretty prevalent in the Brazil market but, at the same time it’s still fragmented. I think the largest player has about a 9% share,” Merlo told analysts.
There’s no doubt that the wheels of globalization are turning. Another clear example is Walgreens and its recent acquisition of Alliance Boots.
The reality is that the problems facing the U.S. healthcare system are very similar to the problems facing western nations throughout the world. By bringing together the two most iconic brands in pharmacy retailing in the world, “you now have the U.S. and the European markets,” Greg Wasson, Walgreens president and CEO, said in an earlier interview. “Close to 1 billion people who are aging, the generic wave coming full speed at us, every country in the world trying to control healthcare costs … and what’s the best way to control healthcare costs? To get more people compliant on generic drugs. This sets us up in two of the biggest economies in the world on a global scale, with the opportunity now to expand beyond Europe into Asia and Latin America.”
Reports: Delhaize America to cut 500 jobs
NEW YORK – Delhaize America is cutting 500 jobs, according to published reports.
News media in North Carolina reported that the Belgian supermarket operator’s American subsidiary would cut 350 jobs and 150 open positions as part of a reorganization. Employees of the company received notifications of the layoffs via email, according to the reports.
The layoffs come not long after the company experienced a shakeup in December 2012 when Food Lion president Cathy Green Burns left the company, succeeded by Beth Newlands Campbell. Other executive changes included the departure of Delhaize America chief supply chain officer Mark Doiron and the appointment of SVP business service center and sustainability Greg Amoroso as CFO.
David Criscione became chief strategy and development officer, and Deborah Dixson was appointed chief information officer.
Rite Aid provides update on debt refinancing
CAMP HILL, Pa. — Rite Aid has updated the debt refinancing that it announced Jan. 31, the retail pharmacy chain said.
The chain said it would refinance its $1.039 billion Tranche 2 Term Loan due 2014 and a cash tender offer for its $410 million aggregate principal amount of 9.750% Senior Secured Notes due 2016 with the proceeds of a new $1.125 billion first lien term loan, together with borrowings under the amended revolving credit facility. The company currently has received signed commitments for a $1.5 billion credit facility. If it receives additional commitments for the revolving credit facility, the proceeds will be used to prepay a portion of its $331.7 million Tranche 5 Term Loan due 2018.
Rite Aid shares were down by 1 cent in late afternoon trading Friday, trading at $1.67 per share.