Persistence Capital Partners (PCP) has closed its take private of publicly traded Neighbourly Pharmacy, a network of independent pharmacies, for C$415 million plus an earnout of up to another $14 million of consideration.
Neighbourly Pharmacy (TSX: NBLY) owns and operates a chain of retail pharmacies in Canada. According to the company, it is Canada’s largest and fastest growing network of community pharmacies.
The company’s 293 stores operate under the brands IDA/Guardian, Pharmachoice, Pharmasave, Remedy’s RX, and Drug Trading; and sell prescription medication, confections and food, over the counter drugs, and health and beauty aids.
TTM Adjusted EBITDA for Neighbourly, through December 31, 2023, was C$60 million. Based on the C$415 purchase price, this results in a valuation multiple of 6.9x.
Toronto-headquartered Neighbourly is led by CEO Skip Bourdo. “Today’s announcement marks an important milestone for Neighbourly. We are excited for a bright future as a private company,” said Mr. Bourdo. “This going-private transaction provides us with increased flexibility to pursue our growth initiatives, invest in innovation, and drive operational excellence. We are focused on continuing to grow our network of pharmacies and serve more communities across Canada.”
PCP first invested in Neighbourly in 2015 and took the company public in 2021. “I would like to express my gratitude to our shareholders for their overwhelming support throughout this journey. We are excited about continuing to work closely with Neighbourly to accelerate its growth and achieve its strategic vision – to advance the role that independent pharmacies can play across Canada, creating value for customers, patients, employees, and partners,” said Stuart Elman, managing partner of PCP.
Capital for the take private of Neighbourly was funded through a combination of debt and equity with Scotiabank and RBC Capital Markets providing up to $600 million of debt, including a $200 million undrawn revolver. Additionally, Brookfield Asset Management has co-invested in the transaction alongside PCP.
“Brookfield is pleased to provide flexible and strategic capital to Neighbourly and PCP. We look forward to partnering with the company as it continues to grow and deliver high quality healthcare services to Canadian communities,” said Michael Horowitz, a managing director at Brookfield.
Brookfield Asset Management (NYSE: BAM) is an alternative asset management company with a focus on real estate, renewable power, infrastructure, and private equity. The company, with $900 billion in assets under management, is headquartered in Toronto with additional offices in New York City, London, Sydney, Sao Paulo, Dubai, Mumbai, and Shanghai.
Persistence Capital Partners invests in Canadian based or operated healthcare companies that have EBITDAs from C$1 million to C$15 million. Larger transactions can be pursued with the support of the firm’s coinvesting partners. PCP was founded in 2008 by Dr. Sheldon Elman and Stuart Elman and maintains offices in Montreal and Toronto.
TD Securities was the financial advisor to Neighbourly on this transaction and Scotiabank and RBC Capital Markets advised PCP.
© 2024 Private Equity Professional | March 26, 2024
