Page 23 - bne_July 2024_20240709

bne July 2024 Companies & Markets I 23
Russian e-commerce major Wildberries to buy billboard company Russ Group
bne IntelliNews
Russia’s largest e-commerce platform Wildberries will acquire the country's largest outdoor advertising operator Russ Group for an undisclosed amount in order to build its digital shopping platform, RBC business portal reports citing a joint statement from the companies on Telegram.
As followed by bne IntelliNews, the founder, main shareholder (99%) and CEO of Wildberries is Russia’s richest woman, Tatyana Bakalchuk, with Forbes estimating her fortune at $7bn in the latest rating of the 20 richest women in Russia.
Even prior to Russia’s full-scale military invasion of Ukraine, bne IntelliNews reported that the Russian e-commerce space is expected to consolidate around the two to three largest players, similarly to developed markets.
The consolidation intensified in 2022, with Wildberries and Ozon Holdings taking the lead, and some players, such as AliExpress Russia, falling far behind. Both Wildberries and Ozon have strengthened their supply chain capabilities.
Separate follow-up reports by Forbes and RBC citing unnamed sources claimed that the deal has been approved all the way at the top in the Kremlin, with the Minister of Economic Development Maxim Oreshkin informally appointed to curate the merger between Wildberries and Russ Group, with the ambition of creating a “Russian Alibaba or Amazon”.
However, it is unclear what are the potential synergies between the largest e-commerce operator in the country and the largest owner of offline outdoor advertising space. The deal pledges to "create a modern high-tech digital shopping platform" and "a new player in the financial, media, trade and industrial sectors of the economy, as well as in the areas of internet technology, logistics, retail and advertising".
It is also unclear whether the merger with Russ Group will change the shareholder structure of Wildberries, owned by Bakalchuk. The shareholders of Russ Group are linked by RBC and The Bell to billionaire Suleiman Kerimov of Polyus Gold and the veteran technocrat Igor Shuvalov.
The founder, main shareholder (99%) and CEO of Wildberries is Russia’s richest woman, Tatyana Bakalchuk, with Forbes estimating her fortune at $7bn
Unnamed sources told RBC business portal that Bakalchuk and the CEO of Russ Group Robert Mirzoyan will both head the merged company.
The Bell reminds that Russia's largest outdoor advertising oper- ator was founded in the early 1990s under the name APR-City. In 2000, the company was bought by Rupert Murdoch's holding company News Corp. and renamed News Outdoor.
In 2008, Murdoch said he wanted to sell his Russian business, famously claiming that “the more success we have, the more chance of it being stolen from us. We'd rather sell it now".
In 2011, News Outdoor was sold to a consortium of Russian investors led by VTB Capital and renamed Russ Outdoor.
VTB Capital later sold 25% of its stake to the French group JCDecaux.
In 2019, a controlling stake in Russ Outdoor was bought by rival operator Vera-Olympus, which was buying up assets in the outdoor advertising market. According to RBC sources, the company was backed by the financing from the family of Kerimov. The official owners of Vera-Olympus are brothers Levan and Robert Mirzoyan and State Duma deputy Berkhan Barakhoyev.
In January 2022, a month before the start of the full-scale military invasion of Ukraine, 30% in Russ Group was reportedly transferred to the structure of a former employee of the government staff, Sergey Kotlyarenko, who manages the assets of former First Deputy Prime Minister Igor Shuvalov, himself a long-time and close friend and business partner of Kerimov.
However, in September 2022 this stake was transferred back to the formal owner of Russ Outdoors Grigory Sadoyan.
The outdoor advertising market in Russia grew by 45% in 2023 to reach RUB48.8bn, according to a report by research company Admetrix cited by RBC. The digital segment is growing most actively in outdoor advertising: over the past five years it has increased more than three-fold and reached RUB26.8bn in 2023.
www.bne.eu