(Adds Chilean antitrust regulator's decision to investigate
By Caroline Humer
May 16 Abbott Laboratories said on
Friday it would acquire Chile's CFR Pharmaceuticals SA
in a $2.9 billion deal that will more than double its branded
generic drugs business in the fast-growing Latin American
This is the first deal for Abbott since it split into two
businesses and spun off its blockbuster rheumatoid arthritis
drug in a new company, AbbVie Inc, last year and comes
at a time when health mergers have surged.
Abbott plans to focus the branded generics business on about
14 or 15 fast-growing countries in emerging markets.
"Not all geographies are alike and some are not particular
focuses for us," Chief Executive Officer Miles White said during
a conference call with investors. White said the company was
still looking at other transactions.
While the Latin American pharmaceuticals market has been
attractive to big drugmakers, there are few other big
opportunities like CFR because most companies are small,
The pharmaceutical retail and distribution industry does
have some larger companies, such as Mexico's Grupo Casa Saba
and Brazil's Hypermarcas. Earlier this
month, Casa Saba sold its Chilean health retail arm, Farmacias
Ahumada, to Britain's Alliance Boots for $638 million.
Abbott will buy about 73 percent of publicly traded CFR from
a holding company controlled by the Weinstein family, which
founded the company in the 1920s. It will conduct a tender offer
for the remaining shares.
Chile's antitrust regulator, the so-called National Economic
Prosecutor's Office, said it will study the deal "to evaluate
possible anti-competition risks arising from the operation."
It said there was an overlap of various product lines sold
in Chile by both companies, but added that it could not
calculate each company's current market participation or the
level of concentration that would result from the operation
without first gathering more detailed information.
The move was a surprise to Latin American analysts, who were
unaware the company was in the midst of a sale. A few months ago
its $1.2 billion bid for South Africa's Adcock Ingram
failed. [ID: nL5N0LC255]
"This is very surprising," said Claudia Cavada, senior
analyst with Banchile Inversiones in Santiago. "It's a very good
price compared to yesterday's closing price."
Abbott will pay 34.65 cents per share, or about 190.54
CFR shares closed Thursday at 124.51 pesos and were trading
at around 181.5 Chilean pesos on Friday. Abbott stock dipped 0.6
percent to $39.00 in New York.
JPMorgan analyst Michael Weinstein said in a research note
that the move filled a hole while Abbott continues to weigh the
sale of its established products business in developed markets.
CFR Pharmaceuticals sells about 1,000 products across Latin
America and has 7,000 employees and research and development and
manufacturing facilities in Chile, Colombia, Peru and Argentina.
Abbott sells healthcare devices and branded generics in 150
countries and has 69,000 employees.
The purchase would add $900 million in sales in 2015.
Abbott expects the deal to close in the third quarter and to
contribute to sales in the fourth quarter.
Barclays advised Abbott on the transaction and
Deutsche Bank Securities advised CFR Pharmaceuticals.
(549.90 Chilean pesos = $1)
(Additional reporting by Alexandra Ulmer, Rosalba O'Brien and
Anthony Esposito in Santiago and Esha Dey in Bangalore; Editing
by Jeffrey Benkoe, Sofina Mirza-Reid and Lisa Von Ahn)