PCP-backed Neighbourly to buy TorQuest-backed Rubicon

Neighbourly Pharmacy has agreed to acquire Rubicon Pharmacies, an owner and operator of pharmacies in Western Canada, for C$435 million.

Neighbourly Pharmacy has agreed to acquire Rubicon Pharmacies, an owner and operator of pharmacies in Western Canada, for C$435 million. The deal, expected to close in Q2 2022, will be funded in part by a C$120 million investment by Persistence Capital Partners. Rubicon is being sold by TorQuest Partners, which created the existing business in the 2018 merger of Rubicon with Amenity Health Care. Neighbourly is a Toronto-based network of pharmacies.


TORONTO, March 10, 2022 (GLOBE NEWSWIRE) — Neighbourly Pharmacy Inc. (TSX: NBLY) (“Neighbourly” or the “Company”), Canada’s largest and fastest growing network of independent pharmacies, announced today that the Company has entered into a definitive agreement (the “Purchase Agreement”) to acquire all of the issued and outstanding shares in the capital of the entity that owns and operates, directly or indirectly through its subsidiaries, the network of retail pharmacies known as Rubicon Pharmacies (“Rubicon” or “Rubicon Pharmacies”), for a total cash consideration of $435 million (the “Purchase Price”), subject to customary post-closing adjustments and ROFRs (as defined below) (the “Acquisition”). The Acquisition is expected to increase Neighbourly’s Pro Forma Revenues1 by approximately 62% and Pro Forma Adjusted EBITDA2 by approximately 70% and be mid-teens accretive3 to Earnings per Share based on FY20234 full year contribution.

“This acquisition represents a combination of Canada’s community pharmacy leaders,” stated Chris Gardner, the Company’s Chief Executive Officer. “Rubicon’s locations are ideally positioned to expand Neighbourly’s presence from Manitoba to British Columbia, providing us with a significant and complementary footprint. The pharmacies within this primarily rural portfolio are similar to our own, acting as the centre of healthcare delivery for smaller, underserved communities. However, our greatest similarity is our shared values: both companies place an unmatched priority upon patient-focused care.”

“Upon completion of this acquisition, Neighbourly will have added over 140 locations over its last four quarters, nearly doubling the size of our network. We are very pleased with how we have executed upon our stated strategy of growth by acquisition. Despite both this growth and the magnitude of today’s acquisition, Canada continues to offer a wealth of high-quality acquisition opportunities. We look forward to continuing our pursuit of these opportunities as we integrate Rubicon’s pharmacies into our network and welcome its more than 1,500 employees to our exceptional team.”

Transaction highlights
Acquisition of 100 pharmacies represents a complementary platform across key Western Canadian provinces, bringing the total number of locations in Neighbourly’s network to 271, an increase of 58%.
Cash purchase price of $435.0 million represents a pre-synergies multiple of approximately 12.0 times Rubicon’s Adjusted EBITDA5 for the trailing 12-month period ended September 30, 2021.
Effective multiple expected to be lower after giving effect to i) synergies, ii) planned real estate dispositions, and iii) tax assets.
Acquisition will increase Neighbourly’s revenues by approximately 62% and Adjusted EBITDA6 by approximately 70%.
Neighbourly anticipates realizing a total of approximately $2.5 million in cost synergies within 90 days of the Acquisition’s completion.
The Acquisition is expected to be mid-teens accretive7 to Earnings per Share based on FY20238 full year contribution.

The Acquisition will be partially financed through a $250 million equity issuance of subscription receipts, of which approximately 48% will be purchased on a private placement basis by an affiliate of Persistence Capital Partners (“PCP”), Neighbourly’s largest shareholder, and the balance will be distributed by way of public offering. The balance of the purchase price will be financed through draw downs on the Company’s Restated Credit Facilities (as defined below) and cash on hand.

Closing of the Acquisition is subject to customary conditions for transactions of this nature, including the receipt of necessary third party consents and regulatory approvals. Neighbourly expects the completion of the Acquisition to occur during the second quarter of calendar year 2022.

About Rubicon Pharmacies
Rubicon Pharmacies is Western Canada’s largest owner and operator of independent pharmacies, including more than sixty locations in Saskatchewan. Its stated mission is to provide, “the highest quality experience for the people we serve with a focus on improving health.” The meaningful bond between customers and pharmacists is an integral part of Rubicon’s strategy.