Don Agro International is set to transform from what was previously a Russian farming company to a healthcare business focusing on cancer treatment.
In a Dec 30 filing, Don Agro announced details for its planned acquisition of a group of healthcare entities for just over 3 billion rubles, equivalent to around $43.7 million.
Among the entities to be acquired by Don Agro are the Euroonco Group, described as a network of expert oncology clinics operating in Moscow, St Petersburg and Krasnodar under the names Euroonco and Uni Clinic.
The acquisition, first announced in Sept 2024, will be funded by cash now held by the company after it sold its original farming business in July 2024 for $67.1 million.
Following which, Don Agro, which was listed on the SGX in Feb 2020, has been classified as a cash company by the SGX and is obliged to find a new operating business or to be delisted.
"The company believes that there are positive prospects in the medical industry in Russia which will provide additional and recurrent revenue streams for the group and will allow the group to have better prospects of achieving profitability and ensure longer-term growth," reads Don Agro's filing.
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In addition, Don Agro does not rule out potential expansion into markets such as Singapore and Malaysia, Kazakhstan and Uzbekistan, United Arab Emirates and Qatar as well as Azerbaijan.
The company will be seeking shareholders' nod for this deal at an EGM to be held on Jan 28. Don Agro plans to change its name to UpHealth Group.
The enlarged entity will still be led by current executive chairman Evgeny Tugolukov.
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Besides running Don Agro, Tugolukov is described to have over a decade of experience in healthcare as the founder of MedScan, a network of Russian clinics established in 2014.
According to Don Agro, citing its lawyers Hogan Lovells, the change in business nature will not be subject to ongoing US-led sanctions imposed on Russia.
“All transactions related to the production, manufacturing, sale, transport, or provision of medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices" are not included.
On a pro forma basis, upon completion of the acquisition, Don Agro's NTA would have decreased from $51.7 million to a net tangible loss of $15.7 million, or from 34.43 cents per share to negative 10.48 cents.
Don Agro says this is due to the payment to the vendors, as well as pro forma net liabilities of $28.8 million incurred by entities to be acquired as at Dec 31 2024, as well as transaction costs for the deal.
As and when necessary and deemed appropriate, Don Agro says it may explore secondary fund-raising exercises.
Don Agro International last traded at 13 cents.
