Cheryl fragrance retailer makes key acquisition in Birmingham-led deal
A WORCESTERSHIRE pharmaceutical distributor and retailer has made a key acquisition in a deal financed and advised out of Birmingham.
The deal sees Redditch-based Lexon (UK) take over Norchem. The terms of the deal have not been disclosed.
Family-run Lexon, which has a turnover of £150m and employs more than 400 members of staff, completed the purchased in a strategy to grow its retail operation and expand its distribution network, which already includes fully automated warehouses in Redditch and Leeds.
Based in Ferryhill, County Durham, Norchem was formed as a buying group in 1960 by six independent pharmacists. Today, as well as the wholesale business, the company has 20 retail outlets across the North East.
The deal, which has been backed by the Royal Bank of Scotland (RBS) and RBS Invoice Finance in Birmingham, takes the total number of pharmacies operated by Lexon and associated businesses to 46.
Following the deal, the current management team at Norchem will remain in place.
Pritesh Sonpal, director at Lexon, said: “We’re extremely pleased to conclude this deal as it represents a step change for Lexon.
“It builds on our existing distribution network and importantly, it will give us the ability to further improve our service to the existing 1,400 independent pharmacies that we already serve.”
Alison Herdman, chairman of Norchem, added: “I am delighted that Lexon has acquired the business as they have demonstrated to us their long term commitment, not only to the retail stores, but more importantly to independent pharmacy. This has been the core principle of the business from its beginning.”
Nick Dawson, corporate partner at the Birmingham office of Irwin Mitchell, supported by senior associate, Rob Laugharne, advised Lexon on the deal. Jon Bew and Natalie Barnes provided banking advice to Lexon.
Commenting on the deal, Dawson said: “Lexon is a great example of a successful family-run business which has a clear vision and is determined to grow and build market share. It is already one of the leading pharmaceutical distributors in the UK and this deal will significantly boost its position.”
Richard Newman, relationship director for RBS, worked alongside Chris Lewis, the bank’s director of structured finance, and David Chick of RBS Invoice Finance.
Newman said: “We are proud to be able to provide Lexon with a bespoke facility to support the growth of the business. This acquisition represents a transformational step forward for Lexon and a fantastic opportunity to further enhance what is already an excellent operating model. Having supported Lexon for 14 years, we’re delighted to be a part of the firm’s continued development. We wish the Lexon team every success in extending their enterprise value.”
David Doogan and Edward Sunderland, of Pinsent Masons advised RBS and RBS Invoice Finance respectively, supported by associate Victoria Baker.
The shareholders of Norchem were advised throughout the deal by KPMG and Square One Law.
KPMG’s Mark Booth, Head of Retail Pharmacy, and Michael Downes, associate director, led the Corporate Finance advice. Booth commented: “This sale is a great result for Norchem’s shareholders and employees and represents a valuable investment in growth for Lexon.
“Against a backdrop of regulatory change we are seeing a resurgence of M&A activity in retail pharmacy. Indeed this transaction comes hot on the heels of the acquisition of the Co-operative Pharmacy portfolio by Bestway, on which we also advised.”
The Square One Law advisory team included senior partner, Ian Gilthorpe, partner, James Bryce and associate, Ashraf Ali.
Financial due diligence was led by David Billington, at BDO.
