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16 I Companies & Markets bne June 2021
work of stores it operates 39 superstores under the Megamart brand that generated revenues of RUB17.4bn last year.
The majority of the convenience stores are located in Moscow and its surrounding region (1,329) as well as in St Petersburg and its surrounding Leningrad region (458 outlets).
The remainder of the stores in the convenience format are located in the Central, North-West and Urals federal districts. Most of the superstores operate in the Sverdlovsk region, with four stores located in the Tyumen region, according
to the company.
The total selling space of the assets to be acquired is approximately 854,000 square metres, of which approximately 778,000 sqm are in the convenience format and 76,000 sqm
in the superstore format. Over 90% of the selling space in the
“We will significantly strengthen our market positions in both capitals, which are strategically important for Magnit’s further expansion in the country”
convenience format is rented, while 74% of the selling space in the superstore format is owned. In terms of floor space, Dixy is the same size as Magnit.
As part of the transaction Magnit will also acquire five distribution centres with the total space of 189,000 sqm located in Moscow, St Petersburg and the Chelyabinsk region.
For its part, Magnit’s Dunning told bne IntelliNews in the interview that it was looking scale up its operations through organic growth as well as acquisitions.
Magnit already made a $1.78bn bid to buy Lenta in April 2019, another of Russia’s top five retailers, but was pipped at the post by steel tycoon Alexei Mordashov, who paid $729mn to by a 42% stake in the retailer as well as a cash offer to buy
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out the remaining minority shareholders, scooping up his first asset in the retail sector.
Dixy’s president Yakubson’s analysis that a consolidation
of supermarkets happens in times of crisis seems to still be holding true as Russia’s economy has been not only hurt by multiple shocks in the last year, but the eight-year long decline in incomes has also put a lot of pressures on retailers, who
are slowly coming together to gain more market power and
so better compete with the dwindling number of increasingly powerful rivals on the market.
Agreement and deal price
“Magnit has entered into an agreement with Mercury Retail Group Limited to acquire 100% shares of Dixy Holding Limited. The deal’s price is based on the current enterprise value of RUB92.4bn ($1.3bn) and is subject to certain adjustments depending, among other things, on the net debt and net working capital changes calculated as of closing date,” Magnit said in a press release.
The company went on to expand on its expansion plans and capex.
“At this stage Magnit’s full-year 2021 store opening, redesign and capex guidance published on February 4th, 2021 remains unchanged,” Magnit said. “The company’s 2021-2025 long- term targets, including store openings, redesign, e-commerce development, margins, working capital improvements, leverage, dividend payments, etc. are also confirmed without any changes. It is expected that completion of the transaction will not limit the company’s ability to continue dividend payments,” Magnit added in a comment that will please investors after it paid out $666mn in bigger than expected dividends in April.
Jan Dunning, president and CEO of Magnit, commenting on the deal said: “We are pleased to reach an agreement with Dixy Holding Limited shareholders to acquire their business. Magnit’s key strategic priorities focused on return-driven profitable growth stay unchanged. While organic expansion in all core formats remains our primary focus, we are happy to selectively take advantage of this opportunity to support further growth with the acquisition of the strong retail brand. Upon completion of the transaction, we will significantly strengthen our market positions in both capitals, which are strategically important for Magnit’s further expansion in the country. High-quality locations, well-known brand and strong customer base in Moscow and St Petersburg will allow Magnit to become one of the top-players in the respective regions. Moreover, given scale of the transaction this may substantially improve our overall market position in the sector.”
For the meantime Magnit intends to keep Dixy’s business as a separate legal entity with the stores operating under existing Dixy brand. The deal awaits Federal Antimonopoly Services (FAS) approval and is planned for closure before 31 August, 2021.