Private equity firms HIG and CapVest have joined the competition to acquire AAH Pharmaceuticals, the UK’s largest pharmacy wholesaler, which has been put up for sale just three years after being acquired by German PE firm Aurelius, according to a report by the Financial Times.
The report cites unnamed sources familiar with the situation as confirming that Aurelius has engaged advisers from BNP Paribas to oversee the auction process for the company, which serves a network of 14,000 pharmacies across the UK and generates annual revenues of £3bn.
HIG and CapVest are among several private equity groups eyeing the business as the first round of indicative bids is expected later in September, the sources said. Aurelius is reportedly seeking an enterprise value, including debt, of approximately 10 times the company’s earnings, which are projected to reach around £90m this year.
Aurelius, known for acquiring struggling businesses and divesting troubled assets, has faced criticism for its approach. Earlier this year, it faced backlash from current and former employees of UK cosmetics retailer The Body Shop after pushing the company into bankruptcy just six weeks after acquiring it.
Aurelius employed similar strategies with the phasrmacy business it purchased from healthcare provider McKesson for £477m in late 2021, marking its largest acquisition to date. The firm sold off Lloyds Pharmacy’s 1,000 outlets before placing the remainder of the business into administration.
Under Aurelius’ ownership though, AAH – the wholesaling arm of the business – has seen a significant turnaround, with active customer accounts having increased by 60% since 2022, despite competition from other major pharmacy wholesalers like Phoenix and Alliance Healthcare.
The auction is expected to conclude by the end of the year, though Aurelius may choose not to sell if the bids do not meet its valuation expectations.
Representatives from Aurelius, HIG, and CapVest declined to comment.
