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WOONSOCKET, R.I. — CVS Caremark Corp. has acquired the Brazilian drug chain Drogaria Onofre.
Announced by president and chief executive officer Larry Merlo during a February 6 conference call on the company’s strong fourth quarter results, the acquisition marks CVS’ first venture outside of the United States. Terms of the deal for the 44-store Sao Paulo, Brazil-based chain were not disclosed.
“We have been exploring opportunities for possible international expansion. And we’ve said many times that our approach would be measured and we would exercise financial discipline,” Merlo remarked during the call. “We believe this acquisition is a great example of that strategy in action.”
The announcement of CVS’ acquisition of Drogeria Onofre, Brazil’s eighth-largest drug chain in terms of sales, ends two months of speculation that CVS was looking to expand its business offshore.
In early December the Brazilian newspaper Valor Economico reported that CVS was in advanced talks to buy Onofre and that if a deal was reached CVS would pay 650 million Brazilian reals ($313 million) to purchase an 80% stake in the chain and take on the company’s debt. CVS declined to comment at the time.
Drogaria Onofre has stores in Sao Paulo, Rio de Janeiro, Minas Gerais, Espirito Santo and Rio Grande do Sul states.
“Onofre has a strong reputation in the marketplace,” Merlo said in the conference call. “They do a great job in tailoring their stores to the market and to different customer segments.”
CVS, he said, sees a bright future for the chain going forward.
“We view Brazil as an attractive market, given that health care and pharmacy are expected to grow by double digits over the next decade. And while chains are prevalent, it is still a highly fragmented market. So we see nice opportunities to grow the business over time.”
CVS’ acquisition of Drogaria Onofre marks the second time in eight months that a U.S. drug chain has ventured into the international market.
In June Walgreen Co. agreed to pay $6.7 billion for a 45% equity stake in the global pharmacy and health and beauty aids chain Alliance Boots. Under the deal Walgreens has the option to acquire the remaining 55% of Alliance Boots in about three years for $9.5 billion.
