"Magnet" can buy a pharmaceutical distributor from its shareholder Marathon Group

The son-in-law of Foreign Minister Sergey Lavrov, who bought a stake in Magnit from VTB for VTB's money, imposes a grocery network of an unnecessary pharmacy retailer.
The second largest retailer in Russia, the retailer Magnit, said that it was discussing the purchase of the pharmaceutical distributor "SIA Group", which is one of the five largest. Negotiations are underway, the representative of Marathon Group, the owner of SIA, confirmed.

Checking directors

May 24, Marathon Group Alexandra Vinokurova announced that she had bought 11.8% of Magnit from VTB, who also lent the deal. On the day of the transaction, the package was worth 62.5 billion rubles.

Sale of SIA will not be related to that transaction, says a person who knows the details of one of the transactions. A representative of VTB says: the possible purchase of SIA is certainly not part of the agreement with Marathon on the stake in Magnit and VTB does not finance the new deal. Contact with Vinokurov failed.

Negotiations on the purchase of SIA are of concern, said the minority shareholder of Magnit Prosperity Capital Management, it will be a deal with related parties.

The deal will show whether Magnit has an independent board of directors, said Mikhail Burmistrov, general director of Infoline Analytics: the purchase of the SIA may negatively affect the shareholder value of Magnit due to a conflict of interest in this transaction, which undermines the confidence of minority shareholders. "The pharmacy market is overheated: many players, few earn", - fears the director Prosperity Alexey Krivoshapko.

Unobvious logic

"Magnet" explains the interest in the drug wholesale by the fact that he wants to quickly win pharmacy retail. The retailer has several dozen of its pharmacies and testing of the first points showed that the distribution needs to be available for scaling inside, says Olga Naumova, the executive director of Magnit. "This will give us efficiency, logistics infrastructure and quality of the assortment systems, suppliers" (TASS quotation ).

 But pharmacy chains never work with one distributor, three employees of different pharmacy chains assure. There is an automatic price comparison service, one of them says: pharmacies choose the cheapest offer. Different distributors, he continues, give access to rare medicines, which are not available to all suppliers. The profitability of the pharmaceutical distributor is small, 1-1.5%, the interlocutor of Vedomosti knows, he will not manage to significantly reduce prices even for his own pharmacies.

"If there are wholesalers who will bring everything they need for 1%, why buy a wholesaler?" Krivoshapko is perplexed: as a large buyer, Magnit can count on an attractive price from any distributor or purchase directly from manufacturers.

"There is no obvious logic in such a transaction, Magnit has problems in its core business, the company needs to restore growth, build a team of managers," criticizes Krivoshapko. "We will ask the board of directors to take it as seriously as possible [to our concerns]."

 The deal will not have market principles for price formation - because of its participants, believes Sergey Shulyak, CEO of DSM Group. "Magnet" does not cost anything to repay the debt of SIA, it has a huge turnover, almost equal to the turnover of the entire pharmaceutical market.

No transaction parameters were submitted to the board of directors of Magnit, VTB representative said, therefore it is premature to discuss its effect.

Pharmacy account

The final structure and method of the transaction will be discussed after the analysis of the "SIA groups", said "Magnet". According to the representative of Marathon, the financial standing of "SIA Group" is stable: turnover in 2017 grew by 40%, revenue amounted to 54.5 billion rubles. A person close to the shareholders of SIA, and a source familiar with the leadership of the Marathon Group, say that the total debt of the pharmaceutical distributor is 9-10 billion rubles, the main creditor is VTB. The representative of VTB declined to comment on the information about his client.

When the merger of SIA with the National Immunobiological Company ("daughter" of "Rostecha") was discussed, the pharmaceutical distributor was estimated at 9-12 billion rubles. without debt, says a person who knows this from one of the participants in those negotiations - "Magnet" is unlikely to pay more. Taking into account the debt, the value of the UIA does not exceed 1 billion rubles. Even if the company demonstrates the average industry profitability by net profit in the wholesale at the level of 1-2%, Burmistrov believes, if the company is unprofitable, then the business value is close to zero. SIA does not cost more than 1.5-2 billion rubles., Says IQVIA general director Nikolai Demidov.

 The company was founded by Igor Rudinsky in 1993. In the best of times, the turnover of SIA, once the largest distributor of medicines in Russia, reached 100 billion rubles, and Rudinsky Forbes in 2011-2014. included in the second hundred of the richest businessmen of Russia.

In 2012, the SIA began to lose ground. In 2013, due to illness, Rudinsky departed from operational management. In 2014, SIA was actually on the verge of bankruptcy: after the death of Rudinsky, the company was due to banks 7.2 billion rubles. and could not service debts. Some manufacturers stopped shipping goods, pharmacies - pay bills.

Vinokurov became a shareholder of SIA in December 2015, buying it from the heirs of Rudinsky. Vinokurov managed to agree on a debt restructuring of 7.2 billion rubles. At the end of 2016, the loan portfolio of the Siberian Railway fell by 1 billion rubles. At the same time, SIA attracted financing from VTB for 5.5 billion rubles.

Rosteh without distributor

Which share will be bought by Magnit in the UIA, will also be decided in the course of the negotiations, the representative of the Marathon Group says. Now, according to him, "Magnet" is interested in the distributor as a whole. "As an investment company, in case of a good offer, we will be ready to sell 100% of SIA. At the same time, "Sia Group" will not participate in the deal with Rostekh, "he said.

In early 2018, Marathon and Rostekh signed a shareholder agreement. On it 75% minus 1 share of "Natsimbio", the only supplier of vaccines for the national vaccination calendar, except pneumococcal, will remain for Rostekh, and the rest will get Marathon. In payment for "Natsimbio" will receive 49% of "SIA groups", and Marathon Group - option to acquire up to 100% of "Natsimbio" in case of losing its status as a sole supplier.

But, according to the representative of Marathon, the preparation for the deal with Rostekh, a detailed analysis of the situation in Natsimbio and the valuation of assets showed: the capacity of the "SIA groups" is excessive. Hospital segment in the business of "SIA groups" is about 5%, says the representative of Marathon; and develop in the commercial segment of "Natsimbio" while "for a number of reasons is not appropriate." "We discussed this issue with the members of the Board of Directors of Natsimbio and we agree on the assessment of the situation: the company needs to focus on a key function and ensure, in particular, the development of innovative production of immunobiological products in Russia, this is the main and invariable goal of the transaction, investment company.