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STADA signs contract on the sale of two Russian production facilities and thus completes another significant step in the context of “STADA – build the future”

  • 15/08/2012

Bad Vilbel, August 15, 2012

STADA Arzneimittel AG (hereinafter referred to as “STADA”), Bad Vilbel, signed a contract and accompanying temporary service contracts today, on August 15, 2012, on the sale of two Russian production facilities, according to which all assets of both Russian production facilities will be transferred via a sale of STADA´s indirectly wholly owned subsidiaries OOO Makiz Pharma, Moscow, and OOO Skopin Pharmaceutical Plant, Ryazanskaya obl., to LLC DMN Invest, Moscow, in the context of a partial management buyout (see the Company’s ad hoc release of August 7, 2012 regarding the approval of the sale by the STADA Executive Board and the STADA Supervisory Board).
In the context of this disposal, which represents another significant step in the production restructuring in the context of the Group-wide cost efficiency program “STADA – build the future” introduced in 2010 (see the Company’s Ad-hoc release of June 7, 2010 as well as STADA´s Annual Report 2011), STADA incurs a one-time burden on earnings in the amount of approximately Euro 9.0 million before taxes or approximately Euro 7.2 million after taxes, which STADA will report as a one-time special effect in the third quarter of 2012. This burden is less than the expenses originally planned in the context of “STADA – build the future” for the Russian production restructuring.

The production of all products, which are currently produced for the STADA Group in both disposed Russian production facilities, will be gradually transfered to other existing Russian STADA production facilities – expected to be finalized by the end of 2014 in the context of a program that has already commenced – whose capacity utilization and cost structure will be substantially improved on the mid-term as a result. Regarding such products made for Russian STADA sales companies that are initially still produced in the sold production facilities during this transitional period, comprehensive supply and service agreements with the acquirer will ensure a continued supply for the period required by STADA and largely following the internal STADA transfer price structure. Following the completion of all product transfers, STADA expects, from today’s perspective, cost improvements of more than Euro 10 million annually as a result of the restructuring of the Russian production locations.

Following today’s completed signing, the transaction is still subject to various completion conditions. The sale is strived to be completed in the fourth quarter of 2012. In the context of the completion, as part of the restructuring, approximately 182 full-time positions in the STADA production companies at the locations of both sold production facilities will be immediately reduced and the affected persons will be employed at previous conditions by the purchaser in the future. In the context of the transaction, the purchaser will also assume the contractual obligation for a further up to approximately 200 full-time positions – which will initially remain with local STADA subsidiaries at the locations of both sold production facilities in order to secure the ongoing production and product transfers – to offer each affected person employment at previous conditions when they are laid off by the local STADA subsidiaries after completion of the transfers at the latest. As a result of the total personnel reduction, STADA could incur further one-time burdens of up to Euro 2 million by the end of 2014, for which, however, from today’s perspective, a total amount of significantly less than Euro 1 million is expected.

Due to the sale of the Russian plants STADA will reach a significant restructuring goal of the “STADA – build the future” program earlier than planned, presumably within the current financial year 2012, namely the reduction of the number of personnel of 2010 by approximately 10% (corresponding to approximately 800 full time positions) throughout the Group by the end of 2013.
For more information, please contact:

STADA Arzneimittel AG
Corporate Communications
D-61118 Bad Vilbel
Tel.: +49 6101 603-113
Fax: +49 6101 603-506