On December 9, 2016, CEELM reported that A&D Pharma Group acquired 78 pharmacies from Sibpharmamed in Romania. We invited Mihaela Scarlatescu, Head of Legal and Compliance at A&D Pharma, to explain how the transaction was realized.
CEELM: According to PeliFilip, who advised A&D on the deal, the transaction was "very complex." Could you elaborate on what made it so?
M.S: In the pharma retail business, the economic and commercial environment is in continuous movement, being challenging by its nature. Development and business both increase by acquisition of a new chain of pharmacies, and its integration into the already existing business is not a one-day task. It requires full commitment from all available resources and professionalism from all those engaged into the transaction: operational, finance, legal and regulatory, HR.
The acquisition of the Polisano pharmacy chain was particularly complex because of Polisano Holding’s position on the market, which included: high financial risk, insolvency announced by Polisano’s distribution business line; and several pledges against Polisano’ business. All these aspects together with other ones that were not so difficult to mitigate were a real and tumultuous challenge which our team and our collaborators had to encounter and had to solve with no risks for Sensiblu.
CEELM: Why did you opt for PeliFilip as the firm to assist you in this deal?
M.S: We search on the market and we chose to work with one of the best on the market; one for which professionalism and trustworthy are values of doing business. Considering the transaction volume, risks and required resources, we knew we needed an external counseling team of lawyers who were strongly business oriented, proactive, and open to accept the challenge.
CEELM: Why did you prefer to lead the negotiations team yourself rather than relying on your external counsel?
The external counsel does have more experience in similar transactions, but the know-how of Sensiblu business and its particularities, needs, and expectations were known by the in-house legal team. The synergy created was the best recipe starting with the sensitive phases of the negotiations and continued with each step we moved further, until the end of one of the top deals on the Romanian pharma market in 2016.
CEELM: What role in the negotiations did PeliFilip play in terms of "closely assisting” you on the negotiations?
M.S: From the moment when the strategy of enlarging the Sensiblu business was announced, we knew that a business risk assessment was definitely required. At this stage we benefited from PeliFilip's expertise in business risk assessment from legal and commercial point of view. In addition, during the entire project, Sensiblu faced various bottlenecks which required strong legal expertise for continuing into a healthy and with-low-level-of-risk transaction.
CEELM: As a result of the acquisition the number of units owned by Sensiblu increased by 20%. What challenges does this growth pose to you and your legal team going forward?
M.S: I cannot say if 20% is the precise percentage of growth, but unquestionably this acquisition was not considered completed once the contract was signed. For the legal team a new project started, with new challenges and timelines. This new project is called “integration.” The volume of work is substantial, as the transaction was not about one, two, or event ten pharmacies, but about 78 pharmacies spread all over Romania. We must register the new pharmacies with different Romanian authorities (including the Trade Register, the Health Ministry, and national and local health authorities), we need to renew the licenses, and we have to manage the transfer of personnel and make sure they're properly integrated. Basically, the work volume is explosive at this level, even if the transaction is considered an achieved success from the business perspective. Once the “legal integration” is completed, we expect to re-enter a normal working flow.
Another aspect which should considered is when we speak about integration; it is significantly about people -- for whom we have to build a communication channel that is transparent and trustworthy. Of course, these “soft” aspects are not managed only by the legal department, but also by other resources from Sensiblu: HR, Finance, IT, etc.
We are optimistic and now we are ready to face new challenges!