Magnit PJSC announces entering into negotiations regarding the acquisition of SIA Group

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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: [e-mail] 
 
                    Office: [phone] x 17600 
 
Dina Svishcheva Deputy Director, Investor Relations 
 
                          Email: [e-mail] 
 
                    Office: [phone] x 15101 
 
Media Inquiries          Media Relations Department 
 
                                    [e-mail] 
 
                         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)