Tuesday 21 November 2017

Chemist chain Sam McCauley lining up takeovers

Non-Executive Director Tony Keohane, Chairman Jimmy Tolan and CEO Tony McEntee
Non-Executive Director Tony Keohane, Chairman Jimmy Tolan and CEO Tony McEntee

Gretchen Friemann

The Sam McCauley chemist chain is eyeing acquisitions of rival pharmacy multiples, with at least one deal understood to be in the pipeline, in a strategy to accelerate the scale-up the business under new private equity owners.

The group has also beefed up its board, tapping Jimmy Tolan, the former boss of health insurer VHI, as incoming non-executive chairmans; and Tony Keohane, the former head of Tesco Ireland, as a non-executive director.

The moves come after the pharmacy chain was bought in a €50m deal over the summer by Carlyle Cardinal Ireland (CCI) a private-equity partnership of US buyout giant, Carlyle Group, and local investment house, Cardinal.

Founder and executive chairman Sam McCauley retained a minority stake after that deal and will stay with the business as non-executive director, following the latest reshuffle.

According to sources, part of the attraction for both Mr Tolan and Mr Keohane in joining the board, was the opportunity to gain a stake in the group, which ranks as the third-largest pharmacy chain in Ireland with over 30 stores and almost 600 employees nationwide.

The new appointments come as the CCI Fund, ramps up an ambitious growth plan for the pharmacy chain in an effort to challenge the market dominance of the two biggest players, Lloyds and Boots.

Sam McCauley, which has most of its outlets in Munster and runs a number of stores in Cork and Dublin, has been snapping up a string of single, owner-managed pharmacies.

But it is understood the chain is now eyeing larger-scale acquisitions with sources indicating a bigger deal is in the pipeline.

Chemist chain founder Sam McCauley has minority stake
Chemist chain founder Sam McCauley has minority stake

Mr Tolan and Mr Keohane are expected to help steer this expansion strategy, as well as mentor executives within the business.

But the pitch for greater growth comes as Lloyds, which is owned by the US pharmacy giant McKesson, also continues to expand its market share.

The chain remains the biggest player in the sector with over 90 stores and it intends to roll out a range of new service as part of its integration strategy for the Irish pharmaceutical distribution, UDG Healthcare, which Lloyds acquired in 2015 for €408m.

The 2015 accounts for Sam McCauley, the latest available, show the chain notched up a pre-tax profit of €2.98m in that financial year, up by over €1m from 2014.

It posted a turnover of more than €74.78m. That is understood to have increased to €78m last year. At the time of the takeover, CCI signalled its aim to more than double this figure via growth and acquisitions.

Mr Tolan stepped down from VHI in 2012, but has since picked up a number of board seats including chairmanship of the nursing home operator CareChoice, which was acquired by the French investment fund InfraVia Capital Partners for close to €70m.

Mr Keohane left Tesco in 2015 after 37 years.

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