Actuality March 26, 2008

   The American TPG Capital private investment fund could not purchase the stake in JSC the Seventh Continent chain, but applied around $1 bln allocated to Russia. The pharmaceutical distributor founder SIA International

Ltd. Igor Rudinsky has officially confirmed that has sold the fund 50% minus one stock of the company. The transaction will be declared in April.

   A source aware off the transaction terms as saying negotiations about SIA holding of stocks sale to TPG Capital private investment fund will be completed in April.

The main SIA International Ltd. owner Igor Rudinsky first confirmed the information about the business half sale as saying that in accordance with the transaction terms he and the management continue to control the company. Mr. Rudinsky renounced to name the transaction amount. But RMBC agency analyst Yekaterina Korduban estimated 50% of the largest Russian pharmaceutical distributor at around $1 billion. Nizhpharm Company director general Dmitri Yefimov agreed and marked that such large investment fund presence among the shareholders can substantially increase the company capitalization.

"In 1998 Nizhpharm capitalization amounted around $40 million, but since the European Bank for Reconstruction and Development (EBRD) has become the shareholder of pharmaceutical group (Bank has owned 25% plus one stock of the company), before the transaction with the German Stada business group its value has grown almost twice". The transaction amount corresponds TPG development strategy in Russia. Earlier TPG Capital Russia director as saying the fund intends to invest annually around $1 billion into a consumer sector.

As estimated by DSM Group director general Alexandr Kuzin, SIA's EBITDA margin corresponds 5%, net profitability is 2-3%.

In the Russian TPG representative office renounced to comment the information about the transaction with SIA "up to its official announcement".

   SIA International Ltd. was found in 1993. According to Market Research Center Pharmexpert data, the company's turnover in 2007 was $2,71 billion against $2,16 billion in 2006. The company's stake at the pharmaceutical market amounts 21,29% taking into account the program of additional medicines' provision. The main rivals at this market are Protek Group of Companies with 20,84%, and Rosta Closed JSC with 11,51%. According to the Unified State Register of Legal Entities data, the company founder and SIA director general Igor Rudinsky owns 80% and Rink Closed JSC, where 77,8% belongs to Mr. Rudinsky, controls 20%. The distributor also controls the range of production enterprises which comprise Biokhimik JSC, Sintez JSC and Usolye Sibirskoye chemical-pharmaceutical plant.

   TPG (Texas Pacific Group) is one of largest private investment funds of the world which manages $30 billion. It invests in the companies of the USA, Western Europe and Asia. The priority areas comprise retail, power energy, mass media, consumer sector, airlines.

The Group largest transactions comprise the purchase of TXU energy company for $45 billion in February, 2007 and the purchase of Alltel telecommunication company coupled with Goldman Sachs in May, 2007 ($27,5 billion). Since summer, 2007 TPG has been negotiating about the purchase of JSC the Seventh Continent chain controlling interest.

However, the transaction has broken down.

   SIA and TPG negotiations have started in October, 2007. Earlier, Millhouse Capital Management was also named as SIA claimant, manager of Roman Abramovich assets, but the deal fell through.

   The market participants related the negotiations' beginning with the American fund to the emerged information about the possible nationalization of the largest distribution companies.

In particular, was planned the arrangement of the Pharmaceutical logistic complex on one of the largest distributors' basis – SIA International or Protek Group of Companies. Protek has started negotiations with the German business group Celesio AG, which continue now, to avoid nationalization.

"Combination of investment program of one of the largest investment funds with the policy of Igor Rudinsky high quality team will allow SIA International to become the unattainable leader of this segment, though it has been in top three of the largest distributors", Yekaterina Korduban considers.

   Mr. Rudinsky does not say yet, how much facilities received from the sale will be spent on the direct development of SIA International. According to the version of director of MRC Pharmexpert department for market researches David Melik-Guseynov, these facilities will be partly directed to his own project realization. It goes about the clinical retail development, which comprises medical services, hospitals and clinics. SIA International coupled with Incom already invests into a medical complex and owns a perinatal medical center, which renders services of exclusive obstetrics.

As it has been reported earlier, Irog Rudinsky is going to construct around 50 medical centers by 2011-2012.