September 7, 2016 / 3:06 AM / in 2 years

Brasil Pharma nears sale of two drugstore chains, sources say

SAO PAULO, Sept 7 (Reuters) - Brasil Pharma SA is close to selling two units for about 1.2 billion reais ($375 million) as the nation’s No. 3 drugstore chain shrinks further to cut debt, two people with direct knowledge of the transactions said.

BR Pharma will first sell Drogaria Rosário Distrital to wholesale pharmacy firm Profarma Distribuidora de Produtos Farmacêuticos SA, according to the sources. The sale, which could fetch about 200 million reais, is expected to be closed in the coming days, they added.

BR Pharma will then dispose of Drogarias Big Ben for 1 billion reais, said the sources, who asked not to be identified as the deal is still in the works. The buyer will be industrial and services group Ultrapar Participações SA’s drugstore chain arm, the people said, without giving a timetable for an announcement.

São Paulo-based BR Pharma, which is backed by the buyout arm of investment bank Grupo BTG Pactual SA, did not have an initial comment, just as Ultrapar and Rio de Janeiro-based Profarma.

Created as a vehicle to consolidate the purchases of the Mais Econômica, Rosário, Farmais, Sant’Anna and Big Ben chains, BR Pharma has grappled with integration problems, shareholder disputes, high debt and rising competition.

The process of dismantling BR Pharma gained traction last November, when BTG Pactual was hit with massive client fund withdrawals in the wake of a scandal, leaving the bank short of funds to pour into the drugstore chain operator.

BTG Pactual, Latin America’s largest independent investment bank, engineered the sale of money-losing chain Mais Econômica to a group of local investors for $12 million a few months ago.

Shares in BR Pharma, which sank an average 70 percent between 2013 and 2015, have doubled this year on speculation over the planned asset sales. In the past three months days, the stock rose 158 percent.

Big Ben, which contributes about 40 percent to annual revenue at BR Pharma, has some 150 stores in Brazil’s northern and northeastern regions, while Rosário has about 130 stores located across Brazil’s midwestern region. ($1 = 3.1960 Brazilian reais) (Editing by Guillermo Parra-Bernal and Jeffrey Benkoe)

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