Private equity groups join race to buy UK pharmacy wholesaler AAH
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Private equity groups HIG and CapVest are set to enter the race to acquire the UK’s biggest pharmacy wholesaler AAH Pharmaceuticals, which has been put up for sale just three years after it last changed hands, according to two people familiar with the matter.
Aurelius, the German private equity group which owns AAH, has hired advisers from BNP Paribas to run an auction process for the company, which supplies a network of 14,000 pharmacies across the UK, generating £3bn a year in revenues.
HIG and CapVest were among a host of private equity groups circling the business as the first round of indicative bids were expected later in September, the people said. Aurelius was hoping the business could fetch an enterprise value including debt of about 10 times earnings, which were expected to total around £90mn this year, a person said.
Known for a playbook which involves targeting struggling businesses and stripping away more troubled assets, Aurelius came under criticism from former and current employees at UK cosmetics retailer The Body Shop after pushing it into bankruptcy just six weeks after buying it earlier this year.
Aurelius has applied similar tactics to the pharmacy business it purchased from healthcare provider McKesson for £477mn in late 2021, in its biggest deal to date. It sold off the 1,000-strong network of Lloyds Pharmacy outlets before putting the rump of the business into administration.
It has also overseen a turnaround of AAH, the wholesaling arm of the business. Active customer accounts have increased by 60 per cent since 2022, as it faces competition from other pharmacy wholesalers Phoenix and Alliance Healthcare.
Aurelius, HIG and CapVest declined to comment.
The auction process is expected to conclude by the end of the year. Aurelius might decide not to sell the business if it did not fetch a high enough price, a person said. But AAH was drawing interest from bidders as it was likely to be the only full-service pharmacy distributor to come to market in the coming years, two people said.
AAH delivers more than 10mn items to pharmacies across the UK every week, operating out of 11 local distribution centres.