Report: BIG Pharmacy to buy rival Caring Pharmacy from 7-Eleven Malaysia in RM900m deal

KUALA LUMPUR, July 21 — Pharmacy chain BIG Pharmacy Healthcare Sdn Bhd will be buying over its rival chain Caring Pharmacy Group Bhd from 7-Eleven Malaysia Holdings Bhd for RM900 million, financial news outlet The Edge reported today.

“7-Eleven has closed a deal for the sale of Caring Pharmacy. An announcement on the transaction is expected to be made as soon as today,” a source was quoted saying by The Edge.

In an announcement posted on Bursa Malaysia, listed firm 7-Eleven Malaysia Holdings Berhad — referred to as SEM on the stock exchange’s website — was announced to have asked for a temporary suspension of trading on its shares.

“Kindly be advised that at the request of SEM, trading in the Company’s securities will be suspended with effect from 2.30pm, Friday, July 21, 2023, pending an announcement,” the brief written announcement today by the company said.

In a subsequent company announcement on Bursa Malaysia, 7-Eleven Malaysia’s board of directors announced that Bursa Malaysia Securities Berhad has approved the company’s application for a suspension of trading of its shares “from 2.30pm to 5pm on July 21, 2023 pending an announcement of a very material transaction”.

According to The Edge, Caring’s shares are mainly owned by 7-Eleven at 75 per cent, while Motivasi Optima Sdn Bhd owns the remaining 25 per cent stake.

The Edge states that Berjaya Corp Bhd founder Tan Sri Vincent Tan is the largest shareholder of 7-Eleven with control over a 28.34 per cent stake.

Based on Malay Mail’s checks, 7-Eleven Malaysia Holdings Berhad’s latest quarterly report on Bursa Malaysia said it had two main subsidiaries — namely 7-Eleven Malaysia Sdn Bhd which manages the operations and franchising of the 7-Eleven convenience store chain, and Caring Pharmacy Group Berhad which operates a chain of retail pharmacies under the “Caring”, “Wellings” and “Georgetown” brands.

In the quarterly report for the first quarter this year ending March 31, 2023, 7-Eleven Malaysia Holdings Berhad said it recorded RM976.92 million revenue from January to March 2023, with RM655.852 million contributed by its convenience stores business and with RM320.938 million contributed by its pharmaceutical business.

In terms of core profits for January to March 2023, the convenience stores’ segment recorded a post-tax core profit of RM17 million, while the pharmaceutical segment was at over RM4.55 million, the quarterly report showed.

Subsequently, in a company announcement today, 7-Eleven Malaysia Holdings Berhad said its wholly-owned subsidiary Convenience Shopping (Sabah) Sdn Bhd (CSSSB) had today accepted an offer from BIG Pharmacy Healthcare Sdn Bhd to purchase its entire 75 per cent stake in Caring Pharmacy Group Berhad for RM637.5 million.

Under the RM637.5 million deal, BIG Pharmacy will buy over Caring's retail pharmacy brands — Caring, Georgetown and Wellings — and its manufacturing and distribution of in-house products in Malaysia, but will exclude its businesses in Indonesia operated via indirect joint ventures with Indonesian companies.

In the document attached to the company announcement, 7-Eleven Malaysia said the proposed sale would help it unlock and monitise its investment in Caring and give it a one-off gain, adding that it would then be able to "redirect its resources to grow its convenience store business".

In another company announcement later today, the public was informed that trading on 7-Eleven Malaysia Holdings Berhad shares will resume from 9am on Monday next week.

Citing another source, The Edge reported that there were three main bidders for Caring Pharmacy, but negotiations with 7-Eleven and two of them — US-based private equity firm Carlyle Group and Luxembourg-based private equity firm CVC Capital Partners — ultimately did not succeed.

The Edge said BIG Pharmacy — which is itself backed by Kuala Lumpur-based private equity firm Creador — had placed the third highest bid.

Based on sources, The Edge said it had previously reported last October that Carlyle Group was in advanced negotiations with a RM1.3 billion bid to buy Caring Pharmacy, but 7-Eleven had wanted a higher amount of between RM1.5 billion and RM1.8 billion.

Caring Pharmacy’s website states that the company was founded in 1994 by five pharmacists who had studied together at Universiti Sains Malaysia, and was stated to have 134 outlets nationwide at the end of 2019.

According to BIG Pharmacy’s website, it was founded in 2006 by husband-and-wife team Lee Meng Chuan and Lim Sin Yin who are qualified pharmacists, with the group having merged with RedCap Pharmacy in 2018 and My Pharmacy in 2019. The Edge said BIG Pharmacy now has 282 outlets and is said to be planning for an initial public offering or to be a listed company.

According to The Edge, BIG Pharmacy’s owner BIG Pharmacy Holdings Sdn Bhd (BPHSB) is directly controlled by founders Lee and Lim via a 15 per cent stake and indirectly controlled by them through Uptown Paradise Sdn Bhd which holds 40.22 per cent in BPHSB.

The Edge said Creador has a 35.03 per cent stake in BPHSB via Iris Pallida Sdn Bhd.