On March 6, Lbx Pharmacy Chain Joint Stock Company(603883) announced that it planned to acquire 719643% of the equity of Hunan Huairen Great Health Industry Development Co., Ltd. (hereinafter referred to as the “target company”) held by 14 counterparties including Lin Chengxiong and Chen Jianping with its own capital of RMB 1.637 billion (including loans).
This means that Lbx Pharmacy Chain Joint Stock Company(603883) is expected to formally acquire the regional leader of chain drugstores across Hunan Guizhou region Lbx Pharmacy Chain Joint Stock Company(603883) announced that the acquisition is a landmark event in the pharmaceutical retail industry and a benchmark for the company to develop the holding spark acquisition model.
According to relevant research reports, Huairen health has more than 660 self operated pharmacies in Hunan and Guizhou, which will effectively fill the market of Lbx Pharmacy Chain Joint Stock Company(603883) in Western Hunan and consolidate the voice of Hunan base camp. After the completion of this transaction, Lbx Pharmacy Chain Joint Stock Company(603883) will rank first in the number of seven stores in 14 prefectures and cities of Hunan Province. The number of stores in Hunan Province is expected to exceed 3000 (including franchisees), becoming the chain pharmacy enterprise with the first number of stores in Hunan Province.
1.637 billion yuan acquisition of Huairen dahealth
Before the completion of this transaction, Lbx Pharmacy Chain Joint Stock Company(603883) holds 4.1556% equity of Huairen dahealth. After the completion of this transaction, Lbx Pharmacy Chain Joint Stock Company(603883) will hold 761199% equity of Huairen dahealth.
Huairen great health performance. According to the audit, Huairen health achieved an operating revenue of 1.402 billion yuan and 1.079 billion yuan respectively in 2020 and January September 2021, and a net profit of 99.992 million yuan and 58.499 million yuan respectively.
At the same time, the performance commitment parties Lin Chengxiong, Chen Jianping, Huaihua Renxin and Huaihua Renshu made a commitment to the future performance of Huairen health: the net profit from 2022 to 2024 (referring to the net profit attributable to the shareholders of the parent company after deducting non recurring profits and losses after audit) shall not be less than 110 million yuan, 131 million yuan and 152 million yuan respectively. The average annual compound growth rate of performance from 2021 to 2024 is about 20.17%.
According to the latest announcement, the overall valuation confirmed by both parties through consultation with reference to the evaluation value is 2.275 billion yuan. According to the target company’s annual net profit of RMB 999919 million in 2020, the trading P / E ratio is 22.75 times Lbx Pharmacy Chain Joint Stock Company(603883) said that Huairen health is the most influential retail chain drugstore in Western Hunan, ranking 22nd in the list of top 100 Chinese chain drugstores in 20202021 released by 21st century drugstores, and has a high market share and brand influence in the main business areas. Compared with previous equity acquisitions of similar scale conducted by peers, the P / E ratio of this transaction is 24.66 times lower than that of Xinxing pharmacy and 28.34 times that of Chengda Fangyuan, and the transaction pricing is in a reasonable range.
Lbx Pharmacy Chain Joint Stock Company(603883) said that this transaction is in line with the company’s overall development strategy. The target company will effectively fill the relatively blank area covered by the company’s marketing network in Hunan, and can effectively form regional joint forces, further expand the company’s market in Hunan and improve its market share. At the same time, the acquisition will greatly improve the company’s scale and procurement scale in the national pharmaceutical retail market, reduce procurement costs and improve the company’s overall profitability.
Lbx Pharmacy Chain Joint Stock Company(603883) also said that the company’s own funds and bank credit lines are sufficient, and this transaction will not cause capital pressure on the normal operation of the company. This transaction does not constitute a connected transaction, nor does it constitute a major asset reorganization.
Orderly expansion of chain stores
In recent years, relying on the world bank’s long-term loans and direct financing funds and the public offering of 1.74 billion yuan at the beginning of this year, Lbx Pharmacy Chain Joint Stock Company(603883) is orderly promoting the expansion of chain pharmacies. On the one hand, it acquires the regional leaders of high-quality chain pharmacies, and on the other hand, it accelerates the expansion of self built stores and franchise stores.
At present, the pharmaceutical retail industry presents multiple changes. Compared with regional leading enterprises, the advantages of national leading enterprises of chain pharmacies are becoming more and more obvious.
The equity acquisition of Huairen dahealth is the benchmark of Lbx Pharmacy Chain Joint Stock Company(603883) holding spark acquisition mode. After the transaction is completed, Lin Chengxiong, founder of Huairen dahealth, will still retain 124857% equity Lbx Pharmacy Chain Joint Stock Company(603883) said that Lin Chengxiong, founder of Huairen health, has more than 20 years of experience in the retail industry. Lin Chengxiong retains part of the equity, continues to operate and promises to bet on performance. It is a choice for both sides to trust each other and aspire to long-term common development.
Wang Li, President of Lbx Pharmacy Chain Joint Stock Company(603883) said that by holding and acquiring regional leading enterprises through the “spark” mode of retaining part of the equity of the original founder and strong empowerment of the group headquarters, Lbx Pharmacy Chain Joint Stock Company(603883) achieved cross provincial expansion and deep cultivation of advantageous markets. The founders of many regional leading enterprises continue to give full play to their secondary entrepreneurship enthusiasm and local resource advantages by retaining part of their equity.
“In the future, Lbx Pharmacy Chain Joint Stock Company(603883) will continue to promote the expansion of chain drugstores in an orderly manner. Through direct marketing, spark (i.e.” spark “M & A), joining and alliance ‘Troika’, it will deeply cultivate the markets at different levels, aim at the sinking market and improve the absolute market share.” Wang Li also said.
The data shows that the expansion pace of Lbx Pharmacy Chain Joint Stock Company(603883) stores is steadily accelerating. As of September 30, 2021, Lbx Pharmacy Chain Joint Stock Company(603883) has 8163 stores, including 6055 Direct stores and 2108 franchise stores. From January to September 2021, Lbx Pharmacy Chain Joint Stock Company(603883) added 1866 stores, including 1259 directly operated stores (724 self built stores, 143 asset mergers and acquisitions, 392 equity mergers and acquisitions) and 607 newly joined stores.
