OAO Pharmacy Chain 36.6 rallied to the highest level in four months on a report Russia’s biggest drugstore chain may issue new shares to merge with another pharmacy group.
The stock jumped as much as 13 percent and closed up 9.4 percent at 35.87 rubles in Moscow, the highest level since Oct. 9. The volume of shares traded was 3 million, equivalent to about 21 times the three-month average, according to data compiled by Bloomberg.
The company may issue new shares to raise as much as $300 million for a possible merger with A5 Pharmacy Chain, Kommersant reported today, citing Sergey Solodov, an A5 shareholder, and a person close to 36.6 who it didn’t identify. The merged company will control 25 percent of the Moscow pharmaceutical market, according to an e-mailed report from RYE, Man & Gor Securities in Moscow.
“The combined company may utilize increased economies of scale and take advantage of a strong market position, which could allow the company to bargain for better purchasing and payment terms with suppliers,” Marat Ibragimov, an analyst at UralSib Capital in Moscow, said in an e-mailed note. “The equity-financed structure of the deal may improve the free-float and support the stock’s liquidity, which should be positively received by equity investors.”
Calls and e-mails to 36.6’s spokesman Artyom Baybuz in Moscow weren’t immediately returned. An e-mail to A5 wasn’t immediately returned.
36.6 shares lost 17 percent last year.