“Magnit” will buy out pharmaceutical business from its new shareholder

Magnit
Magnit

“Magnit” entered into negotiations on the acquisition of a pharmaceutical distributor of “CIA Group” – the retailer officially announced on Wednesday, June 6.

Since the end of 2015, Alexander Vinokourov (one of the founders of Marathon Group) has owned CIA Group, which acquired 11.82% shares of Magnit from VTB Bank at the end of May (the package was estimated at 62.5 billion rubles).

Thus, one of the largest Russian retail chains Magnit, “confirms its plans for expansion to the market of pharmacy retail”. Pharmacies can be integrated into a significant part of the Magnit-owned cosmetics stores, convenience stores and hypermarkets, which, according to the retailer’s estimates, “will allow to create a large-scale pharmacy network in the shortest possible time and with low capital costs.”

According to its own data on March 31, “Magnit”manages 16.6 thousand outlets, including 12.3 thousand convenience stores, 3.9 thousand drogerie “Magnet Cosmetics”, and 242 hypermarkets.

Mr. Vinokourov bought pharmacy business from the family of the founder of the pharmaceutical distributor Igor Rudinsky (died in 2014). Representative of Vinokourov said that the Rudinsky family appealed to the businessman with a request to restructure the company’s business. Then experts estimated the cost of “CIA Group” at 7-10 billion rubles (excluding debt.)

The Pharm distributor “CIA Group”, as indicated on its website, has 39 regional offices. The total declared area of warehouse space is 224 thousand sq. m., the staff is 2.7 thousand employees (Magnit has 280 thousand employees). At the end of last year, “CIA Group”, according to the analytics company RNC Pharma, took sixth place in the rating of Russian distributors of medicines with a share of 3.8% (the share of leader – PROTEK – is estimated at nearly 19%).

Revenue in 2017 (holding legal entity JSC “CIA international Ltd”) according to the SPARK database, is almost 61,2 billion rubles., net profit of 36.5 million rubles payables to the end of 2017 to 33.8 billion rubles.

“We have been improving the “CIA Group” financials for about two and a half years, and have stabilized the financial condition of the asset and are glad that the company has become interesting to external investors”, — said representative of “Marathon Group”. He did not name the possible cost of the pharmaceutical distributor.

“Magnit” begins legal and financial analysis of “CIA Group”, as specified in the message of the retailer. The deal will be a cash deal, assured reporters the Executive Director of the “Magnit” Olga Naumova.

The value of the “CIA Group”, given the forecast for growth this year could reach RUB 25 billion excluding debt. At the same time, in experts’ opinion, indirect sale may take place, and a purchase of the rights to debt is possible.

With its developed network of food stores, Magnit has the opportunity to create Russia’s largest pharmacy network. The purpose of this transaction is access to logistics. This will give impetus to the development of “CIA Group”, but it will not come out in the first place in sales, because there are larger distributors “PROTEK” and “Katren” who serve not only their pharmacy chains, but also many others. It will probably take at least five years and investment of 6 billion rubles, excluding funds for the purchase of “CIA Group” to create a pharmacy network.

“PROTEK” owns a networks “Rigla”, “Bud’ Zdorov!” and “Zhivika”. In turn, “Katren ” is the owner of the networks “Melodia Zdorovya“, whose marekt share is estimated at 2.8%.

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