KUALA LUMPUR (Sept 21): 7-Eleven Malaysia Holdings Bhd will dispose of its 75% stake in Caring Pharmacy Group Bhd to BIG Pharmacy Holdings Bhd at a higher price tag of RM675 million, from RM637.5 million announced previously.

The convenience store chain operator, via Convenience Shopping (Sabah) Sdn Bhd (CSSSB), has signed a sale and purchase agreement (SPA) with BIG Pharmacy for the cash disposal.

This follows a binding term sheet that CSSSB received from BIG Pharmacy’s subsidiary back in June, which was announced on July 21 this year.

The cash consideration is a premium of RM37.5 million from its initial value of RM637.5 million announced on July 21.

The new price tag represents an implied price-to-earnings (PE) multiple of 20.7 times, vis-a-vis the PE multiple of pharmacy retailers listed in Asia, as opposed to the 19.6 times PE multiple incorporated in Caring’s 100% equity value of RM850 million.

BIG Pharmacy is also acquiring the remaining 25% in Caring from Motivasi Optima Sdn Bhd, which means Caring will be a wholly-owned unit of BIG Pharmacy upon completion of the proposals.

For 7-Eleven, the original cost of investment for Caring group incurred from February to June 2020 amounts to approximately RM423.23 million.

It expects RM251.16 million in pro-forma gains from the disposal.

Of the RM675 million proceeds, 61.66% or RM416.19 million will be utilised involving 7-Cafe store expansions, followed by repayment of borrowings of RM250 million (37.04%).

The proposed disposal requires the approvals of several parties including 7-Eleven shareholders at an extraordinary general meeting.

“Upon the completion of the proposed disposal, the company would be able to focus its resources to grow its convenience store segment which is expected to contribute positively to SEM group’s future income,” 7-Eleven said.

At market close, 7-Eleven shares rose one sen or 0.51% to RM1.99 on Thursday (Sept 21), with a market capitalisation of RM2.21 billion.

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7-Eleven Malaysia confirms selling Caring Pharmacy stake to BIG Pharmacy