2023-05-17 00:40:00
The American Walgreens Boots Alliance (WBA) refines details for its departure from Farmacias Ahumada. The company announced on Tuesday that it had reached an agreement to sell the chain to a consortium of local investors led by LarrainVial.
In a statement, the pharmaceutical company stressed that the transaction is subject to required regulatory and government approvals, adding that it expects the sale to close by the end of 2023.
“The company has faced a systematic drop in its market share and huge losses at the level of financial results, they compared to the years 2019, 2020 and 2021”said Farmacias Ahumada in court.
According to those familiar with the negotiations, the operation began to take shape inside LarrainVial a year ago, in complete secrecy. So much so, that not even the Americans from Walgreens themselves would know who the natural persons behind the LarrainVial fund are.
Although their names are not known, sources indicate that there are about 20 investors, all of them Chilean and that they operate under the same common umbrella -as in a fund- and not each one separately.
The new controllers would plan to retain the company’s current management and aim to bring it back to leading the industry. In recent years, the company has lost market share and a tight financial situation has it on the ropes.
Now, the acquisition must go to the National Economic Prosecutor’s Office (FNE), as do all operations that exceed a certain amount of resources.
As the next steps to follow, the Prosecutor’s Office would have 30 business days to decide whether to request more information on the process and, later, another equal period to approve the purchase.
In mid-2022, in the midst of the company’s sale process, WBA had changed the bylaws of its Chilean subsidiary, to have a purchase right over minority shareholders, which could require the sale of the latter’s papers.
The Walgreens entrance
The recent history of Farmacias Ahumada has seen a series of changes of owners. The company was founded in 1969 by José Codner and, in 2010, it was acquired by the Mexican group Casa Saba, which also controls Farmacias Benavides, a relevant operator in that country.
Subsequently, this conglomerate sold both pharmaceutical chains to the English Alliance Boots, which, in turn, was absorbed by Walgreens in 2014. Thus, WBA was formed, which was left with control of Farmacias Ahumada.
Walgreens is a multinational that has more than 13 thousand establishments between the US, Europe and Latin America -in total, nine countries- and more than 325 thousand workers. His consumer brands, in addition to Walgreens and Boots, include Duane Reade, No7 Beauty Company and Benavides.
“Since the acquisition of the business in 2014, WBA has made various investments that have allowed it to improve its offer of products and services in addition to building the foundations for its growth and development through innovation, digitization, electronic commerce and operational excellence. ”, says a joint statement between Walgreens and Ahumada, with which the sale of the company was reported.
Likewise, the letter states that the agreement “will allow Ahumada to further enhance its important value, in addition to continuing to be a sustainable and prosperous business capable of bringing health and well-being solutions to more patients through its more than three thousand collaborators distributed throughout close to 300 pharmacies distributed throughout Chile”.
The complex panorama of the chain
The pharmaceutical chain is currently not going through its best economic moment. “In recent years, the company has faced a systematic drop in its market share and enormous losses at the level of financial results, with respect to the years 2019, 2020 and 2021,” the firm wrote in dismissal letters available at labor courts.
In the balance sheets delivered to the courts, Farmacias Ahumada revealed that, as of August 2021, it had liabilities of $273,346 million, with accumulated losses of $268,469 million.
In its responses to the labor lawsuits, the company noted that it has not been able to reverse its situation due to the pandemic and the “economic and social situation of the country”:
For this reason, it assured that it was forced to “necessarily and imperatively adjust its staffing, in order to reduce costs and make its operations viable in the future.”
Thus, from 2020 to date, more than 400 workers have been terminated. “Maintaining the number of existing employees until before 2020 with the conditions generated after that year can even end with the closure of the company,” the firm warned.
Parallel to all this financial panorama, the chain changed its general manager. On January 1, Juan Pablo Corvalán took over as the firm’s chief executive. According to the pharmacy itself, his priority will be to promote the company’s “omnichannel strategy”.
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