Sistema to acquire pharmaceutical companies Sintez and Biocom from Marathon Group
St. Petersburg, Russia - 7 June 2019 - Sistema PJSFC ("Sistema" or the "Corporation") (LSE: SSA, MOEX: AFKS), a publicly traded diversified Russian holding company, announces the signing of a binding agreement to acquire from the investment company Marathon Group stakes in two pharmaceutical companies - Sintez Kurganskoe Medical Products and Goods Company ("Sintez") and Biocom ("Biocom"). The agreement was signed at the St. Petersburg International Economic Forum.
The transaction is expected to close within three months, following approvals from the Federal Anti-Monopoly Service and completion of certain other conditions.
The purchase price will depend upon completion of a number of conditions specified by the parties.
Following the acquisition, Sintez and Biocom are expected to be integrated into Alium, a pharmaceutical company being created through the merger of OBL Pharm and Binnopharm. The combination with Sintez and Biocom will make Alium a top-3 Russian pharmaceutical company in the commercial segment. Alium's portfolio will include more than 500 products and its manufacturing capacity will consist of six production facilities in Moscow, the Moscow region, Kurgan and Stavropol.
Andrey Dubovskov, President and Chief Executive Officer of Sistema, said:
"The acquisition of Sintez and Biocom represents an attractive investment opportunity for Sistema. Both companies possess solid market positions. Moreover, we see an excellent opportunity to generate synergies through their combination with OBL Pharm and Binnopharm. The transaction will lead to the creation of one of Russia's largest pharmaceutical companies, possessing a diversified product portfolio, experienced management team, powerful manufacturing base as well as significant R&D potential. The merger will also drive optimisation of marketing and promotion costs, cuts in administrative expenses and an expansion of the sales geography, which in sum will result in growth in the value of Sistema's stake in the business."
Alexander Vinokurov, President of Marathon Group, said:
"Over the time that Marathon Group has owned Sintez, we have done a great deal to transform the asset: the enterprise was put on a new growth trajectory focused on expanding its portfolio of drugs in the commercial segment, production capacity was modernised and strengthened and record financial results were delivered. We are pleased that our assets will become part of a new ambitious project, and we wish the Sistema team success in this."
Sintez Kurganskoe Medical Products and Goods Company is one of Russia's ten largest pharmaceutical companies by pharmaceutical product output. Sintez accounts for approximately 3% of the total Russian pharmaceutical market, and 23% of the market for antibiotics. The company's product portfolio, which includes more than 300 drugs and medical products, is focused on three therapeutic areas: antibiotics, pulmonary medicines, and medicines for treatment of the musculoskeletal system. More than 30% of the company's production is manufactured using its own compounds. The company introduces 10-15 new medical products to the market every year. 2018 revenue was RUB 8.5 billon.
Biocom specialises in the production of non-patented antibiotics and medicines to treat cardiovascular and central nervous system diseases. The company's portfolio consists of approximately 40 products.
Sistema is a publicly-traded diversified Russian holding company serving over 150 million customers in the sectors of telecommunications, high technology, financial services, retail, paper and packaging, agriculture, real estate, tourism and medical services. The company was founded in 1993. Revenue in 2018 was RUB 777.4 bn; total assets equalled RUB 1.5 trn as of 31 December 2018. Sistema's global depositary receipts are listed under the "SSA" ticker on the London Stock Exchange. Sistema's ordinary shares are listed under the "AFKS" ticker on the Moscow Exchange. Website: www.sistema.com
Marathon Group was founded in 2017 by Alexander Vinokurov and Sergei Zakharov, who were subsequently joined by partner Andrey Tyasto. The company focuses on strategic investments in FMCG, retail, pharmaceuticals, infrastructure and agriculture; growing and developing the assets it acquires; and subsequently exiting these investments. The sub-holding Marathon Pharma combines pharmacy chain Mega Pharm (A-Mega, Da-Zdorov! and Azbuka Life), stakes in Bentus Laboratories (which produces products under the Sanitelle brand) and Fort (previously it also included distributor SIA Group, Sintez and Biocom); sub-holding Marathon Retail holds stakes in grocery store chain Magnit and Russia's largest KFC franchise; Marathon Sport operates the fitness club Sektsia, training service IQ Sports and the Marathon-Tula Cycling Team.