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Dis-Chem, which is listed on JSE, disclosed in an interim earnings statement Thursday morning that it is in the “advanced stages of completing the acquisition” of a strategic interest in a health insurance asset, while he also “investigates” the purchase of a community pharmacy. group.
The Midrand-based health and pharmacy group has decided not to pay an interim dividend for the semester ending in August 2020, due in part to its ambitious purchasing growth plans. Earlier this year, it announced a R430 million deal to buy specialty baby goods retailer Baby City.
Read: Dis-Chem plans to buy Baby City for R430m
While Dis-Chem did not mention the health insurance group it is considering, it noted in its Sens results statement that the asset has “expertise in the design, administration, risk management and delivery of primary health care insurance.” .
The acquisition target also offers “gap coverage and psychological well-being.”
“Covid-19 has highlighted that individuals and businesses are more prepared than ever to spend on healthcare and has also led to a deeper understanding of the importance of mental health, accelerating the need for businesses to support health care providers. employees and their families, “added the group, as motivation for the deal.
“Through this transaction, the group will benefit from vertical integration in the healthcare value chain, with access to a unique set of assets, in a sector of the healthcare market that is experiencing rapid and sustainable growth” , said.
“All of this with margins that are significantly higher than the core retail business. This investment also provides access to segments of the population that historically have not been covered by the private health sector. By doing so, it will help provide deeper access to healthcare to a larger and underserved community, ”added Dis-Chem.
The group said that the planned health insurance transaction will build on other “strategic investments in infrastructure and assets” it has made in previous periods, which “together promote economies of scale.”
Regarding the unnamed community pharmacy group that it is also considering, Dis-Chem said a due diligence process is currently underway.
The potential deal will expand its store base and its ability to provide primary healthcare.
“This acquisition will increase the existing network of stores, most of them in convenience centers,” he said.
In addition to its portfolio of acquisitions, including the previously announced Baby City deal, Dis-Chem cited “the unknown future impact of Covid-19” as reasons for choosing not to pay an interim dividend.
“It has been decided to preserve the cash resources to finance these acquisitions and not to declare a dividend,” he said.
Dis-Chem’s share price rose more than 9% to rand 21.50 on Thursday morning following the announcements.
