AmerisourceBergen Corp. plans to acquire a minority stake in Brazilian pharmaceutical wholesaler Profarma Distribuidora de Produtos Farmacêuticos S.A. and enter a joint venture with Profarma for specialty distribution and services.

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AmerisourceBergen to acquire stake in Brazilian pharmaceutical wholesaler, form joint venture

March 24th, 2014

VALLEY FORGE, Pa. – AmerisourceBergen Corp. plans to acquire a minority stake in Brazilian pharmaceutical wholesaler Profarma Distribuidora de Produtos Farmacêuticos S.A. and enter a joint venture with Profarma for specialty distribution and services.

AmerisourceBergen said Monday that under the acquisition deal it will purchase up to a 19.9% minority interest by offering $22.50 Brazilian Real ($9.67 U.S.) per share for stock in a primary offering by Profarma.

The specialty distribution joint venture will include Profarma's specialty businesses and an equity investment from AmerisourceBergen, and each company will own a 50% stake in the joint venture.

The transaction, an investment of about $100 million, is slated to close in the June quarter of 2014, according to AmerisourceBergen.

"We are very excited to partner with Profarma as we continue to expand our reach into growing international markets," Steven Collis, president and chief executive officer of AmerisourceBergen, said in a statement. "With its long-term macroeconomic growth outlook, favorable demographics and increasing access to health care services and specialty pharmaceuticals, the Brazilian market affords us a tremendous opportunity to expand our international offerings.

"Profarma's success in the wholesale distribution, chain and independent retail, and specialty markets, combined with our expertise in specialty distribution and manufacturer services, provides a compelling opportunity to shape the delivery of health care in Brazil," Collis added.

The association with AmerisourceBergen stands to bring Profarma Specialty's operations access to new medicines, equipment, services and practices that currently don't exist in Brazil, according to Sammy Birmarcker, CEO of Profarma.

"We hope the country will soon be able to benefit from the technological advances that are already available to the specialty pharmaceutical distribution industry in more evolved markets abroad," Birmarcker stated. "We believe that the experience acquired by Profarma over the course of its 52 years of activities, combined with the technology and expertise of AmerisourceBergen in rendering new services, will provide a favorable environment for the development of Profarma Specialty in Brazil."

With 12 distribution centers, Profarma markets about 18 million units per month and serves around 33,000 sales outlets. Last year, it became one of the largest mixed distributors in Latin America and the largest in Brazil with the acquisition of the retail chains Drogasmil/Farmalife and Tamoio, according to AmerisourceBergen.

In the retail pharmacy market, Profarma is Brazil's 10th largest drug chain, with 140 stores in Rio de Janeiro and covering a geographic area that corresponds to 93.5% of the country's consumer market for pharmaceuticals.

AmerisourceBergen is latest large U.S. pharmaceutical player to enter the Brazilian market. In February 2013, CVS Caremark Corp. announced that it closed a deal to acquire Drogaria Onofre, a Sao Paulo-based retail drug chain with 44 stores. Onofre is Brazil's eighth-largest drug chain by sales and has stores in Sao Paulo, Rio de Janeiro, Minas Gerais, Espirito Santo and Rio Grande do Sul states.

The Profarma deal also adds to the global supply chain opportunities that opened up to AmerisourceBergen via its partnership with Walgreen Co. and Alliance Boots, announced in March 2013. Under the arrangement, AmerisourceBergen will access generics and related pharmaceuticals through the Walgreens and Alliance Boots joint venture, Walgreens Boots Alliance Development GmbH. The agreement also included an expanded pharmaceutical distribution pact for Walgreens and the right for Walgreens and Alliance Boots to buy an equity stake in AmerisourceBergen.

"Importantly, these agreements not only expand our U.S. business but also provide opportunities to meaningfully grow our specialty and manufacturer services businesses internationally," Collis stated when the partnership with Walgreens and Alliance Boots was announced.

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