Five Arrows kicks off Laf Santé sale

Francesca Veronesi, Maryna Irkliyenko, Josh O'Neill, Myriam Mariotte
27 May 2022

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Five Arrows has kicked off the sale of French Laf Santé, formerly known as Lafayette Conseil, five sources familiar with the situation said.

The sponsor and majority owner has hired Edmond de Rothschild to advise on the sale of the low-cost pharmacy business, four of the sources said, as well as Deutsche Bank, three of these sources added.

Information memoranda are expected to be circulated this week, three of the sources said. The company is being marketed off EBITDA of EUR 37m-EUR 38m, two of the sources and a fifth source familiar said. The figure is based on adjusted EBITDA, one of the sources pointed out.

The low-cost pharmacy chain generated a turnover of over EUR 1bn in 2021, a 27% increase compared to 2020, according to a company statement.

Investments in pharmacy chains remains a relatively unexplored territory for sponsors in France as not all private equity players know how to grow a pharmacy buy-and-build platform, according to a sector advisor. Bolt-ons can be complex as many pharmacies are family-owned or reluctant to sell to a competitor, the advisor added.

While the majority of Laf Santé's stores are pharmacies, it also operates five stores which focus on natural medicine and food supplements. The company's exposure to the consumers sector could be a concern for bidders, two of the sources said.

The impacts of inflation and a weaker consumer purchasing power on Havea and Arkopharma, two French natural medicines and food supplements specialists that are also up for sale, are a concern for the bidders circling these companies, as reported.

Laf Santé acquired Cocooncenter, an e-commerce website of natural medicine products from Generis Capital Partners in November 2021, as a result of which it launched its e-commerce activity branded as parapharmacielafayette.com.

Five Arrows acquired a majority stake in Laf Santé in 2016, investing alongside the two founders of the company, Jean-Michel Wurfel and Lionel Masson.

The group operates 250 pharmacies, five natural medicines and food supplements stores, 50 optical stores and 23 medical equipment stores through its four brands, Pharmacie Lafayette, Parapharmacie Lafayette, Optique Lafayette and Médical Lafayette.

The network was able to negotiate agreements with pharma laboratories which allowed its brands to offer reduced prices. Founded in 2005, the company is headquartered in Toulouse.

Edmond de Rothschild and Deutsche Bank declined to comment. Five Arrows and Laf Santé did not reply to a request for comment.