* Rare deal in Russian M&A drought
* Latest foray by Abbott into emerging markets
* Gives Abbott manufacturing presence in Russia
(Adds background about Abbott, quote)
By Megan Davies
MOSCOW, June 24 U.S. healthcare firm Abbott
Laboratories is to buy Russian drugmaker Veropharm
for up to $495 million, giving it a manufacturing
presence in a country where it has been operating for nearly 40
years, Abbott said on Tuesday.
The deal bucks a drought in Russian M&A activity this year
due to the country's faltering economy and the Ukraine crisis.
U.S. companies have been particularly stymied from investing
here with Washington advising top executives to steer clear of a
major Russian investment forum in May.
Abbott's purchase is the largest acquisition by a U.S.
company in Russia since Philip Morris International Inc
and Japan Tobacco Inc in December announced plans to
buy stakes in cigarette distributor Megapolis for $750 million
each, according to Thomson Reuters data.
Shares in Veropharm, one of Russia's biggest drugmakers with
a market capitalisation of $300 million, shot up 34 percent to a
three-year high by early afternoon trading in Moscow.
"Russia's middle class is growing and when the middle class
grows the sector that grows is healthcare," said one trader.
"There is an ageing population and it is a country that really
needs good pharma. If you want to get a part of that market
you've got to be a local producer and this is a way for Abbott
to be locally producing."
It is the latest foray by Abbott into emerging markets,
following a $2.9 billion deal earlier in the year to buy Chile's
CFR Pharmaceuticals SA.
Abbott, which sells healthcare devices and branded generics
in 150 countries, last year split into two businesses and spun
off its blockbuster rheumatoid arthritis drug in a new company,
AbbVie Inc. It has said it plans to focus the branded
generics business on about 14 or 15 fast-growing emerging
Under the deal, Abbott will buy Garden Hills, a holding
company which owns a controlling interest in Veropharm, for a
range of $395 million to $495 million, depending on Garden
Hills' ownership of Veropharm at the time of closure, Abbott
Garden Hills currently owns more than 80 percent of
Veropharm but is expected to own more than 95 percent when the
deal closes, Abbott said.
Abbott will assume net debt of $136 million and plans to
fund the transaction with cash on the balance sheet, it said.
It expects the deal, to close in the fourth quarter, to add
$150 million in sales in 2015.
The Illinois-based company, which has been operating in
Russia since 1978, said the deal would allow it to establish a
manufacturing presence in the country. Veropharm has three
pharmaceutical manufacturing sites in Pokrov, Belgorod and
Abbott employs 1,400 staff in Russia in research and
development, logistics, sales and marketing, according to its
(Editing by Jason Bush and Susan Fenton)