TORONTO, May 22, 2012 /CNW/ - Shoppers Drug Mart Corporation (TSX:SC) ("Shoppers" or the "Company") today announced that it has entered into a definitive agreement with Paragon Pharmacies Limited (TSXV:PGN.V) ("Paragon") pursuant to which Shoppers has agreed to purchase from Paragon 19 retail pharmacies and three central fill pharmacies located in British Columbia, Alberta and Manitoba for a purchase price of approximately $75 million in cash, subject to certain adjustments. The completion of the transaction is subject to the approval of Paragon's shareholders, acceptance by the TSX Venture Exchange and certain other customary closing conditions. The parties anticipate that the transaction will close in the third quarter of 2012.
The acquisition of the Paragon retail pharmacies, along with the central fill locations that service the long-term care market, represents a meaningful expansion of Shoppers' retail presence in western Canada and provides a platform for the Company's MediSystem Technologies Inc. business to enter the British Columbia and Manitoba markets.
"This acquisition is a very good fit for Shoppers Drug Mart and is consistent with our stated growth objectives in retail pharmacy and long-term care," said Domenic Pilla, President and Chief Executive Officer of Shoppers. "We look forward to welcoming the pharmacists and employees of Paragon to the Shoppers family and together, continuing to meet the needs of the patients and customers they serve."
Summary of the Transaction
On May 22, 2012, Shoppers and Paragon entered into an asset purchase agreement setting out the terms and conditions pursuant to which Shoppers has agreed to purchase from Paragon substantially all of the assets of Paragon which consist of its chain of 19 retail pharmacies and three central fill pharmacies in British Columbia, Alberta and Manitoba. Shoppers has agreed to purchase the assets for approximately $75 million in cash, subject to certain adjustments. Among other things, Paragon has agreed to provide Shoppers with a period of 20 business days to allow Shoppers to conduct its confirmatory due diligence. During that time, Shoppers may propose one or more purchase price adjustments to reflect the results of its due diligence as it affects adjusted store operating income of Paragon, subject to a maximum of $7 million in aggregate reductions.
The transaction must be approved by at least 66⅔% of the votes cast by the shareholders of Paragon in person or by proxy at a special meeting of Paragon shareholders expected to take place in July 2012. The asset purchase agreement has been unanimously approved by both companies' boards of directors and the transaction is expected to be completed in the third quarter of 2012. Concurrent with the entering into of the asset purchase agreement, Shoppers entered into a voting support agreement with Canterbury Park Capital L.P. and Canterbury Park Capital (U.S.) L.P. (together, "Canterbury"), pursuant to which Canterbury has irrevocably agreed to support the proposed transaction and vote all of the common shares of Paragon that Canterbury owns in favour of the transaction. Canterbury beneficially owns and controls 68,271,783 common shares of Paragon representing approximately 77% of the issued and outstanding common shares of Paragon.
About Shoppers Drug Mart Corporation
Shoppers Drug Mart Corporation is one of the most recognized and trusted names in Canadian retailing. The Company is the licensor of full-service retail drug stores operating under the name Shoppers Drug Mart (Pharmaprix in Québec). With more than 1,206 Shoppers Drug Mart and Pharmaprix stores operating in prime locations in each province and two territories, the Company is one of the most convenient retailers in Canada. The Company also licenses or owns 57 medical clinic pharmacies operating under the name Shoppers Simply Pharmacy (Pharmaprix Simplement Santé in Québec) and eight luxury beauty destinations operating as Murale. As well, the Company owns and operates 63 Shoppers Home Health Care stores, making it the largest Canadian retailer of home health care products and services. In addition to its retail store network, the Company owns Shoppers Drug Mart Specialty Health Network Inc., a provider of specialty drug distribution, pharmacy and comprehensive patient support services; and MediSystem Technologies Inc., a provider of pharmaceutical products and services to long-term care facilities.
For more information, visit www.shoppersdrugmart.ca.
Cautionary Statement on Forward-Looking Information
This news release contains forward-looking information and statements which constitute "forward-looking information" under Canadian securities law and which may be material regarding, among other things, Shoppers' beliefs, plans, objectives, strategies, estimates, intentions and expectations. These include, but are not limited to, statements with respect to the completion of the proposed transaction. Forward-looking information and statements are typically identified by words such as "anticipate", "believe", "expect", "estimate", "forecast", "goal", "intend", "plan", "will", "may", "should", "could" and similar expressions.
The forward-looking information and statements contained herein are based on certain factors and assumptions, certain of which appear proximate to the applicable forward-looking information and statements contained herein. Inherent in the forward-looking information and statements are known and unknown risks, uncertainties and other factors beyond Shoppers' ability to control or predict, which give rise to the possibility that Shoppers' predictions, forecasts, expectations or conclusions will not prove to be accurate, that Shoppers' assumptions may not be correct and that Shoppers' plans, objectives and statements will not be achieved. Actual results or developments may differ materially from those contemplated by the forward-looking information and statements.
Certain of these risks, factors, estimates and assumptions are described in more detail in Shoppers' most recently filed Annual Information Form in the section entitled "Risk Factors", and in the "Risks and Risk Management" and "Risks Associated With Financial Instruments" sections of Shoppers' most recently filed annual and quarterly Management's Discussion and Analysis for the 52 week period ended December 31, 2011 and the 12 week period ended March 24, 2012, respectively, to which readers are referred and which are incorporated by reference in this news release. In addition, all forward-looking statements made in this news release are qualified by the full "Caution Regarding Forward-Looking Information and Statements" in such Annual Information Form and the "Forward-Looking Information and Statements" in such Management's Discussion and Analysis. These risks, factors, estimates and assumptions are not exhaustive. Shoppers disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.
SOURCE Shoppers Drug Mart Corporation