UniChem raises £88m in placing

Alliance UniChem yesterday raised £88m from a share placing to allow the pharmacy group to continue its five-year acquisition spree.

Reporting interim results, the company tapped investors for cash through a book building exercise that was completed by lunchtime. The 16.3 million new shares, representing 5 per cent of the company's share capital, were placed at 550p a share.

Alliance UniChem, which is about to be promoted to the FTSE 100 index, saw its shares close down 41p, or 7 per cent, at 558p.

Jeff Harris, the chairman, indicated that the new funds would not last long, pointing out that the company spent £70m on acquisitions in the first half of the year.

The group, which is in the retail and wholesale pharmaceuticals markets, is the number two player in Europe. In the UK, it is in third place in the retail market, with a 6 per cent share from 800 shops.

"The market is consolidating very quickly. We need the continued availability of funds. There are a lot of wholesale businesses for sale out there," Mr Harris said.

Alliance UniChem reported that, for the six months to 30 June, pre-tax profit rose to £76.9m, from £70.6m last time. On an underlying basis, Mr Harris said the overall market was growing by about 5 per cent during this period and second-half prospects were looking strong. "Our markets are maintaining the robust growth trends that have enabled us to expand our business and grow earnings consistently over many years," he said.

Mr Harris said the main impediment to growth was changes in public policy affecting pharmacies in the countries in which it operates.

"There are periods of harsh government action, which constrains growth in health spending in a particular country," he said.

However, Mr Harris said he was not worried about a current investigation in the UK into the pharmacy market by the Office of Fair Trading. Just 20 new chemists open in the UK a year, due to strict licencing restrictions for the industry.

"There will be change and there is a need for limited relaxation of the rules. This will not impair our business," he said.