Russian retailer Lenta has agreed to acquire Moscow-based online food retailer Utkonos for a base purchase price of RUB 20 billion (€240 million).
The acquisition will enable Lenta to expand its online market share with an additional delivery platform that boasts a loyal customer base, unique competencies, and competitive advantages.
In addition, the online retailer is capable of competing in the online market in Moscow more effectively, especially within the upper-middle and premium segments.
The sale is structured as the purchase of the entire participation interest of LLC “Noviy Impuls-50” from Severgroup LLC, Lenta noted.
The deal will be financed by an additional issuance of Lenta’s shares to be placed by closed subscription to Severgroup and other shareholders will have preemptive rights to acquire additional shares.
The subscription price for this issuance will be RUB 1,087 per share (€13.05).
A special committee of Lenta’s board of directors has approved the transaction.
However, the additional share issue is subject to shareholder approval at the extraordinary general meeting of shareholders, scheduled on 11 February 2022.
In 2020, Utkonos’ share of the e-grocery market in Moscow stood at approximately 10% and the company registered 2.7 million orders with an average ticket of RUB 5,359.
The company offers its services in the cities of Kaluga, Tver, and Tula outside Moscow and the Moscow region.
It reported sales growth of 11% year-on-year in the first half of 2021, to RUB 7.8 billion (€94 million). In 2018, 2019, and 2020, its revenue amounted to RUB 8.5 billion, RUB 8.6 billion, and RUB 14.3 billion, respectively.
Currently, Utkonos operates two wholly owned warehouse dark stores, spanning a total area of 80,000 square metres, and two rented dark stores spread across 21,000 square meters in Moscow and the Moscow region.
The company utilises its own logistics and fulfilment infrastructure comprising 920 vehicles to fulfil orders.
The product assortment comprises more than 85 thousand SKUs with a wide range of fresh products Customers can place orders through the website or its mobile application. During 9M 2021, Utkonos had more than 330,000 customers.
Commenting on the deal, Leonid Sinyutin, analyst with Sova Capital said, "We see the deal as positive, as it is broadly in line with Lenta’s strategy of developing an omni-channel retail business model. In 9M21, Lenta’s online sales soared c. 287% YoY despite incremental revenue growth of 4.7% YoY. The retailer’s share of online sales in total revenue was 3.7% as of 9M21 (RUB 12.3bn) vs. 1% in 9M20 (RUB 3.2bn).
"After the acquisition, Utkonos’ c. 10% share of Moscow’s e-grocery market as of 2020 and its 920 vehicles will be added to Lenta’s two warehouses (80,000 square meters) and two rented dark stores (21,000 square meters). The integration of Utkonos into Lenta’s large customer base should substantially improve the retailer’s e-grocery business and help to fulfill its ambition to have a 10% share of the Russian online food market by 2025."