Don Agro unit to acquire stakes in Russian oncology clinic business for 3 billion roubles

DON Agro International’s wholly owned subsidiary JSC Tetra has proposed to purchase stakes in a Russian oncology clinic group for 3.04 billion roubles (S$43.7 million), said the company on Thursday (Sep 12) in a filing to the Singapore Exchange.

The deal includes a 99.99 per cent stake in 812 Capital and 11.5 per cent of the shares in Centre for Innovative Medical Technologies (CIMT), which is primarily engaged in hospital activities.

812 Capital is the holding company of the group, a federal network of expert oncology clinics operating under the Euroonco brand in cities such as Moscow and St Petersburg. It provides cancer diagnostics and treatment services, such as surgical interventions and palliative care.

As at Thursday, 812 Capital has an issued share capital of 10,000 roubles, while CIMT has an issued share capital of 49 million roubles.

For the fiscal year ended Dec 31, 2023, the group’s aggregate book value and net tangible asset value stood at about 77.7 million roubles, while its net profit was about 497.6 million roubles.

The purchase consideration of 3.04 billion roubles represents a discount of about 5.9 per cent to the preliminary valuation of the group.

The proposed deal comes after Don Agro on Sep 6 signed an agreement with the sellers, Khvicha Akubardia and Aleksander Sviridov.

As at Thursday, Akubardia owns about 70.01 per cent of the shares in 812 Capital and 10 per cent of the shares in CIMT, while Sviridov holds about 20 per cent of the shares in 812 Capital and 1.5 per cent shares in CIMT.

Don Agro, which is disposing of its operating agriculture business, said that purchasing the oncology clinic group would provide it with the necessary recurrent business activities.

It would also allow the company to meet the requirements for a new listing under the Singapore Exchange Catalist rules, said the company.

This is because Don Agro is currently deemed a cash company under the Catalist rule. It may be removed from the official list if it is unable to meet the requirements for a new listing within 12 months from the time it becomes a cash company.

Additionally, the company is also positive on the future prospects of the private healthcare market in Russia, which it says is experiencing “dynamic growth and development”.

The proposed acquisition will be funded entirely by Don Agro’s internal cash resources and proceeds from the disposal of its agricultural business.

On a pro forma basis, Don Agro’s net tangible asset per share would have been S$0.6629 after the disposal and acquisition.

This is down from S$0.941 after the disposal and before the purchase. Its earnings per share would have increased to S$0.1159 after both transactions, as compared to S$0.0639 after the divestment and before the acquisition.

Don Agro’s gearing ratio would rise to 137.9 per cent after both transactions, as compared to 10.3 per cent before the deals.

Shares of Don Agro closed flat at S$0.21 last Friday, before the company called for a trading halt on Monday. It resumes trading on Thursday.