Brazil Pharma : Material Fact - Sant’ana Acquisition

Material Fact

São Paulo, February 13, 2012- Brazil Pharma S.A. ("Brazil Pharma") - (BOVESPA BPHA3), one of the biggest companies in number of stores in pharmaceutical retail industry in Brazil, with 716 outlets on September 30, 2011, pursuant to the terms of CVM Instruction no. 358/2002 and the applicable law, informs to its shareholders, to the market and to the general public that on February 10, 2012, the Company, its subsidiary Farmais Franchising S.A. ("Farmais"), Sant'ana S.A. Drogaria Farmácias ("Sant'ana") and its respective shareholders ("Sellers") executed the Investment Agreement providing the acquisition of the totality of the shares of Sant'ana ("Investment Agreement"), according to the above mentioned terms.

Structure of the Transaction

The acquisition of the totality of the shares of the capital stock of Sant'ana as provided in the Investment Agreement, will be implemented as follows:

• Step 1 - Direct Acquisition.Farmais, a company directly controlled by the Company and without other shareholders, bought from the Sellers shares representing 70% (seventy per cent) of the total and voting shares of Sant'ana for the total amount of R$ 347.034.482,76 (three hundred and forty seven million thirty four thousand four hundred and eighty two reais and seventy six cents) to be paid as follows: (i) R$247.034.482,76 (two hundred and forty seven million thirty four thousand four hundred and eighty two reais and seventy six cents) shall be paid in cash, in national currency as of this date; and (ii) R$100,000,000.00 (one hundred million reais) shall be retained as collateral for the payment of any eventual contingency, provided that any eventual balance will be released to the Sellers from the 4th anniversary of the execution of the Investment Agreement.
• Step 2 - Merger of shares issued by Sant'ana.Within the minimum possible term counted as of this date, Farmais shall perform the merger of the totality of the shares issued by Sant'ana, incorporating the remaining 30% (thirty per cent) of the total and voting shares of Sant'ana. As a result of such merger of shares, the Sellers will become shareholders of Farmais.
• Step 3 - Merger of shares issued by Farmais.Immediately after the implementation of Step 2 above and at the same date of the merger of the shares issued by Sant'ana above mentioned, the Company shall hold a general meeting to deliberate with respect to the incorporation of the shares of Farmais and the consequent incorporation of all shares issued by Farmais held by the Sellers and received pursuant to Step 2 above, which will result in a capital increase of the Company, at economic value, in the amount of R$ 150.000.000,00 (one hundred and fifty million reais) upon the issuance of 15.000.000 (fifteen million) newly issued ordinary shares that will be delivered to the Sellers. The shares issued by the Company to be held by the Sellers will be subject to trading restrictions for a term of three years (lock up).

Further information

A general shareholders' meeting of the Company will be convened to deliberate about the merger of shares issued by Farmais, as described above. The shareholders of the Company, holders of shares as of this date (inclusive) that disagree with the merger of the shares issued by Farmais may exercise the right of withdrawal as provided by Law 6.404/76, as amended.

The detailed terms and conditions of the merger of shares issued by Farmais will be timely disclosed to the market as provided by the current legislation and regulation.

The transaction described above was submitted to the Brazilian antitrust authorities (Sistema Brasileiro de Defesa da Concorrência), pursuant to applicable law. The Company will maintain the market informed about the subsequent events relating to the transactions provided in this Material Fact.

For further information, please contact the investor relation office of the Company (www.brph.com.br/ri or [e-mail] / 55 11 2117-5290).

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