Sweden’s ICA Gruppen to buy pharmacy chain Apotek Hjartat $770 million

Swedish grocery chain ICA Gruppen today struck a deal to buy the country's largest private pharmacy chain Apotek Hjartat from private equity firm Altor for 5.7 billion Swedish crowns ($770 million).

The acquisition will catapult ICA Gruppen to become the second-largest chain in the Swedish pharmacy retail market.

The merger of Apotek Hjartat with ICA's existing pharmacy business Cura will hold a market share of around 30 per cent and annual sales of around 11 billion Swedish crowns (1.47 billion).

The acquisition is expected to generate annual cost synergies to ICA Gruppen of around SEK 80 million from 2019 mainly from overhead, purchasing and logistics.

ICA Gruppen said that the transaction provides significant opportunities in an interesting and important sector and creates synergies with ICA Gruppen's pharmacy business Cura.

Founded in 2009, Apotek Hjärtat has around 2,000 employees and operates 306 pharmacies. Its operations consist of pharmacy retail in the form of pharmacy stores, e-commerce, inpatient operations and animal pharmacy operations.

Apotek Hjärtat's posted net sales of SEK 8,266 million ($1.2 billion) in 2013.

Cura was founded in 2010 by ICA Gruppen and is located in large ICA stores across the country.

It has around 700 employees and 65 pharmacies and a turnover of SEK 2,000 million (270 million) in 2014.

''With the acquisition of Apotek Hjärtat, a well-managed company with a strong brand, we increase the scale of this business and see significant opportunities and synergies. We can now provide customers with an even better and more comprehensive product offering within health, medicine and wellbeing, with high standards on safe and effective medication,'' said Per Strömberg, CEO of ICA Gruppen.

ICA Gruppen is one of the leading retail companies in the Nordic region with 2,300 of its own and retailer-owned grocery stores.

Although its core business is grocery retail, it has other businesses like ICA Bank, ICA Real Estate and a number of wholly-owned or partly-owned portfolio companies.

It has 21,782 employees and had sales of 100 billion Swedish crowns ($13.5 billion).