Dears Pharmacy is looking to acquire 12 Lloydspharmacy branches in Scotland, which would see the multiple double the number of pharmacies under its control to 24, RxBridge has revealed.

The Dears acquisition process is being supported by RxBridge, a finance company that specialises in the pharmacy sector, which has provided £2.6 million in total funding, according to a case study published by the financiers this month.

The independent pharmacy group was founded in 1990 and has been majority-owned by Mahyar and Sara Nickkho-Amiry since 2019, it said.

Read more: Lloydspharmacy branch numbers dropped almost 50% in nine months

Under their ownership, the group grew from five stores in Edinburgh, Fife and Glasgow to 12 pharmacies in total between 2019 and 2022, it added.

But this year, with the widespread sales of Lloydspharmacy stores across the UK, the couple saw an opportunity to “think a lot bigger”, it said. 

Lloydspharmacy reiterated that it is "selectively selling some branches", first announced in April.

 

“Underperforming” branches

 

Dears submitted bids for Lloydspharmacy branches in the central belt region of Scotland where it already operated and "secured" 12 “underperforming” pharmacies from the multiple, according to RxBridge.

The 12 branches were available at “discounted prices” of “around a third of their market value” and have “potential to be quickly turned around”, it said.

However, Lloydspharmacy required a 20% deposit on each property, leading Dears to turn to the financier for “an immediate, discretionary line of credit” that could be accessed more quickly than from other lenders, it said.

Read more: £400m guaranteed income for Scots pharmacies as 2023/24 details emerge

RxBridge creates credit lines for pharmacies that are based on the business’s revenue stream, rather than the assets of the company, it added.

It said that this allows it to offer funding of “up to four times” the pharmacy’s monthly NHS income and that its “streamlined” application process allows for “rapid” approval on loan applications. 

 

“Unique opportunity”

 

Seb Miles, managing director for RxBridge, told C+D this week (August 29) that the Lloydspharmacy sales were a “unique opportunity” for mid-sized pharmacy groups and that purchases of Lloydspharmacy branches had been RxBridge’s predominant business in the last six months.

He told C+D that as a lender, RxBridge looks at whether the buying group has a “knowledge of the locality”, which “sets the independents apart from the multiples”.

Read more: Scotland’s model for pharmacy offers lessons for England’s future

Mr Miles said that he had noticed “more optimism” among buyers of Scottish pharmacies because the general NHS remuneration is considered better than that offered in England.

He added that in his experience, the value of Scottish pharmacies “tends to be higher” than their English counterparts.

This is “a reflection” of the different remuneration arrangements in the countries, which lead Scottish buyers to be “more confident”, he told C+D.

 

More Lloydspharmacy sales on the horizon?

 

Mr Miles said that pharmacy businesses of “every sort of size and shape” are looking at the Lloydspharmacy estate, with some targeting the multiple’s branches in “a defensive play” to protect their existing assets from “young [and] hungry” independent contractors. 

Nevertheless, Mr Miles said that Lloydspharmacy sales seem to be “accelerating”, with Rxbridge working on “a lot” of deals that will complete in September and “some into October”.

He told C+D that he suspects that the “majority” of sales would be completed by the end of the year.

Read more: UPDATED: Well Pharmacy snaps up 11 Lloydspharmacy branches in Scotland

Mr Miles added that he “wouldn’t be surprised” at the emergence of a “secondary market” for Lloydspharmacy branches, with recently bought pharmacies coming back on the market.

He said that the sheer number of branches available at the moment is to an extent “naturally suppressing value”. 

“Those assets might be worth more in a different market in 6 [to] 12 months’ time,” he added.

Read more: Scotland to see ‘largest ever' £12.3m global sum uplift, government reveals

A spokesperson for Lloydspharmacy repeated that the multiple is “reviewing its community pharmacy estate and is selectively selling some branches”.

“The team is pleased that colleagues from 12 of its branches in Scotland will be joining the Dears Pharmacy family and that for patients there will be no change in the way they use their local pharmacy,” they said. 

C+D also approached Dears Pharmacy for comment.

 

Scotland acquisitions

 

Last week, C+D revealed that nearly half of the Lloydspharmacy estate has been closed or sold by the multiple in the last nine months. C+D has covered many acquisitions of the estate.

In May, Rowlands Pharmacy announced its acquisition of 30 Lloydspharmacy branches in Scotland, in what it called a "significant investment in growing our network north of the border".

And the following month, C+D reported that a small Scottish pharmacy group had bought back two Glasgow pharmacies that its previous owners had sold to Lloydspharmacy 20 years ago.

Read more: ‘Delighted’: Scottish chain snags six former Lloydspharmacy branches

In July, C+D reported on the purchase of another Lloydspharmacy branch by pharmacist brothers James and Brendan Semple. At the time, James Semple told C+D that buying the branch was “good protection” for their other pharmacies, keeping a “young new contractor” from being their local competition.

The Right Medicine Pharmacy group, which had 42 pharmacies under its control, also announced in July that it had added six former Lloydspharmacy branches across Scotland to its portfolio.

And earlier this month, Well Pharmacy – which is now the second-largest multiple in the UK after overtaking Lloydspharmacy - announced that it had also bought 11 Lloydspharmacy branches in Scotland.