AFK Sistema may acquire Russian drugmaker Veropharm

AFK Sistema, the financial conglomerate owned by the Russian billionaire Vladimir Yevtushenko, is considering acquiring Veropharm, Russia’s third largest drugmaker from its current owner "36.6," a local drug-store chain. The transaction cost has been estimated at between 4.9 and 5.7 billion roubles ($150-$180 million).

Assuming the deal goes through, the acquisition of Veropharm would significantly strengthen the positions of AFK Sistema in the domestic pharmaceutical market, where it currently owns 100% shares of a small drugmaker Binnofarm. Sistema is currently considering three ways of funding the deal: with its own funds, the funds from the placement of new and treasury shares, as well as bank loans.

Russian analysts believe that the deal may stimulate the interest of foreign investors to the Russian pharmaceutical industry and create conditions for new acquisitions. According to DSM Group, a Russian analyst agency in the field of pharmaceutical business, currently Veropharm remains Russia’s third largest Russian pharmaceutical producer.