Shares of Drogasil and Droga Raia rise on potential merger.

247_If the saying "where there's smoke, there's fire" holds true, Drogasil and Droga Raia will soon be a single company. The two pharmacy chains were under the cloud of speculation about a possible merger, which caused DROG3 and RAIA3 shares to rise 19,7% and 8,5%, respectively, in the last seven days. Yesterday, investors were agitated and drove up the value of the shares, which required an explanation from the companies: "Drogasil and Raia have been holding talks to carry out an association between the two companies, contemplating the merging of all their shareholders into a single company, listed on the Novo Mercado of BM&FBovespa. In the context of these talks, the two companies have been studying structural alternatives for the operation, as well as negotiating an association agreement to regulate its terms and conditions. In addition, the shareholders who control the two companies have been negotiating a shareholders' agreement," informs the statement signed jointly by the companies.

The merger of Drogasil and Droga Raia will create the largest pharmacy chain in the country, with 700 stores and revenue of R$ 3,7 billion. Sales would total R$ 1 billion. The association between them would be a reaction to the advance of Drogaria São Paulo, which in June of last year acquired Drogão and formed the largest Brazilian group. The value of the deal, however, was not disclosed. Drogaria São Paulo, a privately held company, only reported that its revenue would increase from R$ 1,7 billion to R$ 2,5 billion and the number of stores would reach 360.