NEW YORK ( The Deal) -- Abbott Laboratories ( ABT) on Tuesday agreed to buy Russia's Veropharm for as much as 21.7 billion rubles ($640 million) in what appears to be the first significant inbound M&A transaction in Russia since the country's tussle with Ukraine began in March.
Abbott, of Abbott Park, Ill., said it would pay as much as R17 billion in cash and absorb R4.7 billion in debt to buy Veropharm, the first publicly listed Russian drugmaker.
The deal is the first major takeover agreement in Russia by a U.S. company since Philip Morris International Inc. in December arranged to pay $750 million, plus a potential $100 million sales-linked bonus, for 20% of its Russian cigarette distributor, Megapolis Distribution BV. Europe and the U.S.
have since placed economic sanctions on Russian business interests to punish the country for its perceived role in fomenting unrest in Ukraine. (Russia, in turn, blames the West for the upheaval, which began with the ouster of the pro-Russia government).
The sanctions were expected to all but halt M&A activity. Washington officials in May advised U.S. bankers against attending an investment forum in St. Petersburg, though the event was well attended by Western business executives.
Russian President Vladimir Putin on Tuesday asked his upper house of parliament to rescind an authorization to use force in Ukraine. Putin is about to embark on a roadtrip in western Europe to plead his case.
And the troubles appear to be retreating in investors' minds too - the Russian Micex Index by Tuesday had recovered losses sustained when it tanked on March 3 because of the Ukraine crisis.