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MAGNIT PJSC (MGNT)
Magnit PJSC announces entering into negotiations regarding the acquisition
of SIA Group
06-Jun-2018 / 12:00 MSK
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Press Release
Krasnodar
June 6, 2018
Magnit PJSC announces entering into negotiations regarding the acquisition
of SIA Group
Krasnodar, Russia (June 6, 2018) - PJSC Magnit (Magnit), one of Russia's
leading retailers, announces that it is entering into negotiations with the
group of companies Marathon Group (Marathon Group), regarding the
acquisition of the pharmaceutical distribution company SIA Group
(Joint-stock company "SIA INTERNATIONAL LTD" Taxpayer Identification Number
7714030099, Primary State Registration Number 1027739185407 located at
Building 12B, 35 Svobody Street, Moscow, 125362, Russia) and is concurrently
initiating its due diligence process. The final structure and method of the
transaction and settlement will be discussed by Magnit and the Marathon
Group in the course of their negotiations and will take into account the
results of Magnit's due diligence on the SIA Group.
Magnit confirms that it plans to expand into the retail pharmacy market. The
Pharmacy pilot project has demonstrated good results. Magnit believes that
pharmacies can potentially be integrated into many Magnit cosmetics stores,
convenience stores and hypermarkets, which according to the Magnit's
estimates, will enable it to build a large pharmacy chain within a short
period of time and with insignificant capital expenditures. Magnit believes
that its high brand recognition and its long-term customer loyalty and trust
is a significant competitive advantage that will create a synergistic
marketing effect and will, ultimately, help to reduce the maturity time of
the pharmacy stores and improve the payback period of the pharmacy project.
Magnit CEO Khachatur Pombukhchan said:
"We think that the Russian pharmacy retail market is one of the most
attractive for expansion. This segment is big enough - at more than one
trillion Rubles, which comprises 10% of the food retail market and has
demonstrated solid growth over the last few years. Nonetheless, the pharmacy
segment has not yet been consolidated and thus, a strong player, like
Magnit, should be capable of capturing significant market share compared to
other large competitors. Besides, pharmacies and food stores are mutual
drivers of customer traffic which should provide a multiplier economic
effect. Magnit needs to build an in-house logistics platform in order to
roll-out and integrate pharmacies into existing and new Magnit stores. On
May 17, 2018 the Board of Directors approved the updated strategy for
pharmacy retail development, including as one of the options the development
of a logistics platform by means of acquisition of the existing distribution
business. It will enable Magnit to grow the scale and scope in as short a
time as possible and to enter the pharmacy retail market with a significant
competitive advantage. SIA Group best meets Magnit's requirements with
respect to regional coverage, assortment range and logistics capacity. In
order to estimate the potential benefits, Magnit will conduct the due
diligence phase with the help of international consultants".
"SIA Group (www.siamed.ru [1]) is one of the Russia's TOP 5 pharmaceutical
distributors and is part of Marathon Pharma group (pharmaceutical subholding
of Marathon Group). According to SIA Group it has well-developed logistics
infrastructure: its total warehousing space in Moscow and 35 other cities of
Russia amounts to 224,000 m2, total number of employees is 2,700.
Marathon Group (www.marathongroup.ru [2]) is the group of companies founded
in 2017 by Alexander Vinokurov, Sergey Zakharov, later Andrey Tyasto joined
the team as a partner. The company's core business is to make investments in
retail, pharmaceutical, infrastructure and agricultural assets and further
develop them.
For further information, please contact:
Timothy Post Head of Investor Relations
Email: post@magnit.ru
Office: +7-861-277-4554 x 17600
Dina Svishcheva Deputy Director, Investor Relations
Email: Chistyak@magnit.ru
Office: +7-861-277-4554 x 15101
Media Inquiries Media Relations Department
press@magnit.ru
Company description:
Public Joint Stock Company "Magnit" is one of Russia's leading retailers.
Founded in 1994, the company is headquartered in the southern Russian city
of Krasnodar. As of March 31, 2018, Magnit operated 37 distribution centers
and 16,625 stores (12,283 convenience, 242 hypermarkets, 210 Magnit Family
stores and 3,890 drogerie stores) in 2,764 cities and towns throughout 7
federal regions of the Russian Federation.
In accordance with the audited IFRS results for 2017, Magnit had revenues of
RUB 1,143 billion and an EBITDA of RUB 92 billion. Magnit's local shares are
traded on the Moscow Exchange (MOEX: MGNT) and its GDRs on the London Stock
Exchange (LSE: MGNT) and it has a credit rating from Standard & Poor's of
BB. Measured by market capitalization, Magnit is one of the largest
retailers in Europe.
Forward-looking statements:
This document contains forward-looking statements that may or may not prove
accurate. For example, statements regarding expected sales growth rate and
store openings are forward-looking statements. Forward-looking statements
involve known and unknown risks, uncertainties and other important factors
that could cause actual results to differ materially from what is expressed
or implied by the statements. Any forward-looking statement is based on
information available to Magnit as of the date of the statement. All written
or oral forward-looking statements attributable to Magnit are qualified by
this caution. Magnit does not undertake any obligation to update or revise
any forward-looking statement to reflect any change in circumstances.
ISIN: US55953Q2021
Category Code: MSCU
TIDM: MGNT
LEI Code: 2534009KKPTVL99W2Y12
OAM Categories: 2.2. Inside information
Sequence No.: 5619
EQS News ID: 692851
End of Announcement EQS News Service
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(END) Dow Jones Newswires
June 06, 2018 05:00 ET (09:00 GMT)
