Page 10 - bne_newspaper_March_29_2019

bne Invest
March 29, 2019 www.intellinews.com I Page 10
Russian steel tycoon Mordashov eyes stake in retailer Lenta
Severgroup of Russian steel tycoon Alexei Mordashov is looking to buy a stake in Russia’s second tier retailer, hypermarket chain Lenta, Vedomosti daily reported on March 27. Reportedly, the stake of Lenta's largest shareholder
TPG Group of 34.13% could be acquired.
No other details were disclosed at that point. Lenta commented to Vedomosti and Reuters that any agreement would be conditioned by
a mandatory buyout offer to all shareholders of the retailer's GDRs. After an IPO in 2014 Lenta has a freefloat of 57.22% on the London Stock Exchange.
At the time of the IPO, just before the sanction crisis broke out between Russia and the West, the GDRs were placed at $10 making a market capitalisation of $4.3bn. Currently the price is at about $3.3 and TPGs stake could be valued at $547mn.
Mordashov does not have large retail assets in his portfolio. Previously it was reported that Severgroup was looking to buy into Russia's second-largest retailer Magnit.
"Lenta may add synergy to online food delivery service Utkonos, as one of the top Russian
retail chains," BCS Global Markets suggested on March 27, noting Severgroup's asset. "Potential acquisition explains the recent 20+% stock rally
in the first half of March," the analysts believe and expect the deal to be carried out with a premium to the market, if it happens.
Possible following the buyout expectations for the stocks performance could become positive. Lenta has been looking for a way to scale up to better compete with the two market leaders, Magnit and X5 Retail Group. BCS GM also reminds that TPG and VTB Capital acquired control over Lenta in 2011 for implied company value of $2.6bn, which makes 60% premium to the current market cap.
Lenta is in the second tier among Russia’s organ- ised food retail chains and struggling to keep up with the two market leaders. The company re- leased weak 2H18 IFRS numbers, underperform- ing the analysts’ consensus estimates by 7% on EBITDA and 20% on net income.
Read the full story here
Telenor to sell 5.7% in Russian mobile major VEON
Nordic telecom major Telenor will sell 100mn shares in Russian mobile major VEON, selling 5.7% of its share capital at $2.16 per ADS, the company said on March 27.
The offering is expected to close this week implies 8% discount to current share price. Telenor continues to cut its stake in VEON (former VimpelCom) and will bring its stake to 9% after the deal.
"No surprise that Telenor is cutting stake, but we did not expect it while Veon share price is at lows," BCS Global Market commented on March 27. The analysts warn that the overhang in VEON shares will persist as Telenor will keep 9% stake.
Telenor would raise about $213mn from the deal. BCS GM also reminds that Telenor has outstand- ing convertible bonds maturing in September with Veon shares as an underlying asset (conversion price $3.9).