Cape Town - Multibrand cash retailer New Clicks Holdings (NuClicks) acquired pharmaceutical wholesale distributor United Pharmaceutical Distributors (UPD) yesterday in a deal worth R281 million - the company's biggest transaction to date and another big step forward in its healthcare strategy.
The deal was expected to significantly bolster NuClick's performance in the full year to August 2003. However, retail analysts said there was some concern whether it would get the approval of the Competition Board.
NuClicks' drugstore strategy differs from other big retailers in the sector, in that pharmacies are fully integrated into its drugstore model. Pick 'n Pay, for example, has opted to go the franchise route.
Trevor Honneysett, NuClicks' group leader, said the latest deal added major opportunities on the supply chain side. He said the transaction was way below the threshold that could cause any concern about it being anticompetitive.
NuClicks has divided its drugstore strategy into two major phases. The first is not dependent on changes in pharmacy legislation being passed. In the second phase, in a deregulated environment, it plans to add dispensaries to Clicks and Discom stores in partnership with pharmacists.
About two years ago the company made a smallish investment in the Link Investment Trust, which operates about 300 pharmacy franchises countrywide with a yearly turnover of about R3 billion.
It subsequently upped its stake to 56 percent. NuClicks also lent funds to a company called Purchase Milton & Associates to set up a flagship chain of pharmacies.
Honneysett said the UPD acquisition added substance to the distribution services that NuClicks could provide to pharmacists countrywide.
The acquisition would be financed through the issue of 39 million NuClicks shares at R7.20 a share and there would be an extended lock-up period.
Kevin Vyvyan-Day, UPD's chief executive, said the company supported NuClicks' vision for healthcare.
NuClicks share price closed 29c up at R7 yesterday.