Altor sells Swedish pharmacy for €620m

The Swedish firm ditched IPO plans in favour of a trade sale to Nordic retail giant ICA Gruppen

Stockholm-headquartered Altor Equity Partners has sold Apotek Hjärtat to Nordic retail company ICA Gruppen in a deal valuing the company at SEK 5.7 billion (€620 million; $769 million).

ICA Gruppen, which has 2,300 retailers in Sweden, Norway and the Baltic region, has acquired 100 percent of the business from Altor and minority owners on a cash and debt free basis.

Altor formed Apotek Hjärtat after acquiring more than 200 pharmacies from the Swedish government with capital from its €2 billion Altor Fund III when the pharmacy market in Sweden was de-regulated in 2009. Since then Apotek Hjärtat has also acquired Apotek1 and Vårdapoteket, and invested “heavily” into several different areas, including its own distribution set-up and e-commerce, Altor said in a statement.

The size of Altor’s original investment in Apotek Hjärtat and the return multiple from the divestment were undisclosed. Altor could not be reached for further comment at press time.

According to a statement from ICA, following completion of the transaction Apotek Hjärtat will merge with Cura apoteket, ICA’s own pharmacy chain, which was founded in 2010. Apotek Hjärtat’s net sales for 2013 were SEK 8.27 billion (€900 million; $1.12 billion) and Cura apoteket’s net sales for 2013 were SEK 1.67 billion. The two businesses have combined sales amounting to around SEK 11 billion and together will occupy second position in the Swedish market with a market share of around 30 percent, ICA said.

In June Altor began preparing Apotek Hjärtat for a listing on the Stockholm stock exchange. However, Fredrik Strömholm, Apotek Hjärtat board member and Altor partner, said in a statement that during late summer and early autumn the firm began a “parallel dialogue” with several companies in the sector, with discussions with ICA becoming “more and more concrete” by mid-October.

The divestment comes four months after Altor closed its fourth fund, Altor Fund IV, on its target and hard-cap of €2 billion. Around 90 percent of the vehicle’s investors, which officially came to market in the spring, were LPs in previous Altor funds, PEI reported earlier.

The investor base consists mainly of US university endowments, charitable foundations and pension funds, with Nordic investors representing 20 percent of total commitments and the remaining capital coming from the US, Europe, the Middle East and Asia. Fund IV will have a 15-year term and will focus on developing mid-market companies in the Nordic region.