Chemist chain Sam McCauley lin­ing up takeovers

Irish Independent - Business Week - - BUSINESSWEEK - 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.

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. IRE­LAND’S food ser­vice market is now val­ued at a record €7.8bn, ac­cord­ing to new re­search from Bord Bia.

The sec­tor is now made up of 33,000 in­di­vid­ual out­lets.

The lat­est re­search shows take­away and so called ‘grab-andgo’, are key driv­ers of growth, al­though health­ier foods trends are in­creas­ingly in­flu­enc­ing menus.

Bord Bia’s 2017 Ir­ish Food­ser­vice Chan­nel In­sights Re­port tracks all food con­sumed out­side the home – from restau­rants and pubs, to work­places, hos­pi­tals and vend­ing ma­chines.

The sec­tor is tipped to grow to €9bn by 2020.

The lat­est data shows ca­sual din­ing is a dom­i­nant trend, with more than a third of con­sumer spend on limited ser­vice restau­rants.

This in­cludes ca­sual din­ing and take­away, com­pared to 12pc in full ser­vice restau­rants and 17pc in pubs.

A drop this year in pub din­ing fig­ures, ex­clud­ing al­co­hol, is at­trib­uted to Brexit which Bord Bia said has led to a de­crease in week­end trips and hol­i­day vis­its to Ire­land from the UK.

How­ever, the two market seg­ments show­ing the big­gest share gain are ho­tels, ac­count­ing for 17pc of to­tal food ser­vice con­sumer spend­ing; and cof­fee shops and cafes – al­though the lat­ter still only makes up 6pc of ac­tiv­ity.

Chemist chain founder Sam McCauley has mi­nor­ity stake

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