Management of PJSC “Magnit” has proposed to the Board of Directors to consider options for the development of other business directions – Magnet Cosmetics and Pharmacies that concerns warehousing and logistics infrastructure, including the possibility of acquiring the “SIA Group”. This is stated in the message of “Magnit”.
“The Board of Directors supports the Company’s strategy for the further development of such business areas and believes that as a result of such acquisition, advantages and synergies can be achieved, as the analysis of the transaction and other possible options prepared by the management and international financial adviser of the company shows. The Board of Directors supports management’s negotiations on a possible acquisition on the best possible terms for the company. The management should submit a final proposal on the terms of the potential transaction to the Board of Directors,” the report said.
PJSC “Magnit” (Krasnodar, INN 2309085638) is a holding company of a group of companies engaged in retail trade through the eponymous chain of stores.
Net profit of PJSC “Magnit” under IFRS for the first half of 2018 fell by 14.4% to 17,767 billion RUB from 20,748 billion RUB with the decline of EBITDA, partly offset by the optimisation of costs for payment of interest and taxes.
Net profit margin was 3%. Revenue increased by 7.2% to 595.263 billion RUB from 555.025 billion RUB related to 11.7% growth in retail space and a 4.5% reduction in LFL sales. EBITDA decreased by 9.6% to 44.1 billion rubles from 48.79 billion rubles.
During the second quarter the company opened 335 stores. The total number of stores as of 30 June 2018 was 16 960 (12 503 convenience stores, 244 hypermarket, 213 supermarkets “Magnit Family” and 4,000 drogerie stores).
SIA GROUP is one of the largest Russian pharmaceutical distributors in Russia. The company was established in 1993. The main activity is the sale of medicines, medical products and parapharmaceutical products to pharmacies and medical institutions of Russia. 39 regional representative offices of the company operate throughout the Russian Federation. Modern logistics complex provides optimal conditions for storage of drugs and timely shipment of products. The total area of warehouse complexes in Moscow and 35 cities of Russia is 224 000 m2. “SIA GROUP” team today is 2700 skilled employees.
On October 4, 2018, the Board of Directors of PJSC “Magnit” supported the purchase of the pharmaceutical distributor “SIA group”, which is part of the Marathon Group of Alexander Vinokurov the son-in-law of foreign Minister Sergey Lavrov.
The transaction price will be no more than 5.7 billion rubles, and it will be paid by ordinary shares of “Magnit”. For these purposes, the retailer will increase the volume of the buy-back program (share repurchase) from 16.5 billion rubles planned until the end of 2018 to 22.2 billion rubles.
The owner of “SIA Group” – Marathon Group, undertakes not to sell shares of “Magnit”, which it will receive for the asset sold, for at least three years.
Financing the transaction with shares will reduce risks by increasing Marathon’s interest in the long-term growth of the capitalization of Magnit, the press service of the retailer explained. The Marathon only noted that they consider the conditions being fair.