Page 118 - RusRPTMay19

Russia's third-largest retailer and hypermarket operator Lenta has closed its GDR buyout deal, the company said in a London Stock Exchange filing. Lenta bought RUB981mn ($15mn) worth of GDRs, or 4,533 receipts, making 0.93% of all floated GDRs. The price of the buyout that was announced in October 2018 was $3.28. Lenta cut the programme short, as initially it planned to buy out RUB11.6bn worth of GDR. However, the minorities will now have a chance to sell at a higher price, as after the recent acquisition of Lenta by Severstal Group of steel tycoon Alexei Mordashov will have to make a mandatory buyout offer at 3.6 per GDR.Mordashov bought the shares from Lenta's largest shareholder TPG Group, which sold its 34.13% stake, and the European Bank for Reconstruction and Development, which sold its 7.4% stake. His Severgroup paid $3.6 per one GDR of Lenta, or $728.9mn for the whole stake or $1.75bn, which makes about 8% premium to the market.
Dixy, Bristol, and Krasnoe and Beloe get approval to merge. The intention to merge was announced in January this year by Igor Kesaev and Sergey Katsiev (shareholders of Dixy/Bristol), and Sergey Studennikov (shareholder of Krasnoe and Beloe). According to the announcement, the merged chain is to be controlled 51% by Kesaev/Katsiev, with 49% belonging to Stundennikov. The merged company is going to be the third largest Russian food retailer (the companies’ combined turnover in 2018 was RUB672bn). Dixy, as a struggling retailer, is to get strong partners in the alcohol sector and better access to this niche market through improved pricing. At the same time, Dixy has a much wider assortment range that could be placed in alcohol stores. Bristol gets the geographical diversification it needed into the non-European part of Russia and vice versa for Krasnoe and Beloe. We also see the combined purchasing power of all three being stronger. The Russian food retail sector continues to offer opportunities for consolidation, as the share of the top ten players is still only 35% (vs. 50-70% in developed markets).
9.2.6 Agriculture corporate news
One of Russia's largest meat producers Cherkizovo Group plans to acquire a large competitor poultry producer Prioskolye, Reuters reported on April 2 citing unnamed industry sources. In March shares of Cherkizovo Group jumped 50% on the Moscow Exchange hitting all-time high of RUB2,250 amid the anticipated acquisition of one of Russia's largest poultry producers Eurodon (aka Evrodon). Already in November 2018 bne IntelliNews suggested that Cherkizovo would be the most likely buyer for troubled Eurodon, as the company has been consolidating poultry assets through acquisitions ahead of the upcoming opening of the vast Chinese market to Russian frozen poultry supplies. As for Prioskolye, bne IntelliNews reported the acquisition of its assets in the Altai region by Cherkizovo. Now the company of Igor Babayev reportedly aims to acquire Prioskolye's main assets in the Belgorod. Other acquisition by Cherkizovo include the troubled poultry maker Belaya Ptica (White Bird). Should Cherkizovo indeed acquire more Prioskolye it would "become untouchable and become not only the largest [poultry producer] in the country, but one of the largest in the world," sources told Reuters. In March Cherkizovo also said it will seek to raise up to $200mn through a secondary public offering (SPO) on the Moscow Exchange. The company will use its treasury shares and allow shareholders to sell. The funds raised in the SPO will be used for general corporate purposes, cutting leverage, as well as an additional share issue planned for after the offering. Details on the SPO have not yet been released. Cherkizovo said the freefloat will be aimed at 25% and
118 RUSSIA Country Report May 2019 www.intellinews.com