The chief executive of Russian retailer Magnit, Sergey Galitskiy, has sold 29.1% of his shares in the company to a subsidiary of VTB Bank, one of Russia's largest financial services providers.
Following the sale, Galitskiy's share in Magnit has fallen to 3%.
The deal was valued at RUB 138 billion (€1.95 bullion), and the total number of shares involved in the transaction is 29,656,200.
As well as selling his shares, Galitskiy has confirmed that he intends to step down as director general of the business and as a member of its board of directors.
'The Company, on its own behalf and on behalf of its shareholders and all employees, would like to express their profound gratitude and deep appreciation to Sergey Nikolaevich Galitskiy for his efforts to create and build a unique business in Russia and to wish him every success in all his future endeavours,' Magnit said in a statement.
The closing of the sale of his shareholding is conditional on the necessary approval by Russian competition authorities, and upon the terms and conditions customary for this type of transaction, the retailer said.
Magnit also said that it intends to consider the possibility of a share repurchase plan at some stage this year. Part of the shares are repurchased are proposed to be used as a long-term incentive for the company’s management.
Bank Investment
Commenting on its share acquisition, Andrey Kostin, chairman and president of the VTB Bank Management Board, said that "currently the global retail market is undergoing a period of significant transformation caused by rising consumer demands and preferences, mutual penetration of online and offline sales channels and increased role of high technologies.
"In Russia, we see vast potential for this segment’s perspectives, and using VTB Group’s expertise and financial resources we plan to take Magnit to a new level of its development."
VTB Group has previously invested in Russia's retail industry, and is a major investor in the company's business sector, with more than $15 billion worth of large scale investments in 22 projects over the past nine years.
Sales Performance
In January, Magnit announced a 6% sales increase in full-year 2017, posting RUB 1.14 trillion worth of sales for the year, and gross profit of RUB 304.71 billion.
The retail group opened 2,291 new stores in 2017, bringing its total network of stores to 16,350; making it the biggest retailer in Russia by store count.
However, the company hit a setback in December, when a large proportion of its retailers were hit by a technical glitch affecting cash registers - an issue which cost the company approximately RUB 1 billion in lost sales.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
