Wellington, Sept 8 NZPA - The nation's only listed pharmacy group, Life Pharmacy Ltd (LPL), today went unconditional on its latest acquisition to build a giant retailer in the sector.

It is now committed to taking over Pharmacybrands -- the nation's largest retail pharmacy group -- and its Amcal and Unichem brands -- in an effort to fend off growing competition.

The combined group competes with independently-owned pharmacies, Radius Pharmacies, and smaller groups, as well as supermarkets.

The merged company will have about 30 partly-owned pharmacies, 220 franchised pharmacies and its presence in most towns and cities will give it between 30 percent and 35 percent of the market.

LPL -- which also has the Life Metro, Life Outlet and Care Chemist brands -- operates 53 retail outlets nationally, including 29 Life-branded stores, and 24 pharmacies branded Care Chemist. In 20 of the partly-owned businesses, individual pharmacists own 51 percent and LPL has a 49 percent stake, though another two operations are 50:50 joint ventures.

Now these will be joined by the Unichem, and Amcal brands.

"Both companies have different strengths and combined we will have a strong platform to deliver superior services," said LPL chairman, Mark Vuksich.

The offer valued Pharmacybrands at about $20 million, or $19.55 per Pharmacybrands share, and Life Pharmacy at around $36.2 million.

An independent report by Simmons Corporate Finance concluded the offer was between 3 percent and 35 percent above its valuation range.

Pharmacybrands shareholders receive 39.783 LPL shares for every one of their own. The shares will be issued at 49.1c each.

Life Pharmacy, which raised $11.2m in a rights issue last year, used $4.2m of cash to buy back 8,045,958 partly paid ordinary shares.

It has also made a 1:100 taxable bonus issue of 523,382 fully paid ordinary shares to existing shareholders to use up imputation credits.

LPL listed in 2004 and made losses for several years.

Its chairwoman, Liz Coutts, recently stepped down and resigned from the board of the company, even though the company had reported a full year net profit of $61,000, thanks to retail and dispensary sales which lifted revenues over $7m.

Life Pharmacy, which is 50.01 percent owned by Gulliver's Travel founder Andrew Bagnall, was looking at Pharmacybrands, in April 2007, when it was acquired by Cape Healthcare which bought a 66.1 percent stake.

Now Mr Bagnall's shareholding in the combined group -- held through LPL Trustee -- will be around 26.7 percent, with a similar sized stake held by Cape Healthcare for Peter Merton and the Zuellig family.

Mr Vuksich said the effective merger of Life Pharmacy and Pharmacybrands was a major transformation that provided a platform for future growth and profitability in a sector where pharmacy groups had typically struggled in the past because of a lack of scale.

The company's new board will comprise Andrew Bagnall, John Bolland, Andrew Davidson, Peter Merton, Bill Meaney, Ian Sharpe and Mark Vuksich.

Mr Vuksich said the board welcomed Mr Merton, Mr Meaney, and Mr Sharpe and looked forward to creating a market leader in the sector.

"The merger represents a real opportunity to establish an organisation of sufficient scale, strength and capability to play a major role in reshaping the pharmacy sector in New Zealand," he said.

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