Russian retailer Magnit has announced the acquisition of the Dixy retail chain, which encompasses 2,651 stores across the country.
The group made the acquisition through its main operating subsidiary JSC “Tander”, and said that it plans to operate the Dixy business as a separate entity within the Magnit group.
'Strong Retail Brand'
“We are pleased to reach an agreement with Dixy Holding Limited shareholders to acquire their business," commented Jan Dunning, president and CEO of Magnit. "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."
As well as 2,612 convenience stores, which last year boasted an annual revenue of RUB 281.4 billion, the Dixy portfolio also includes 39 superstores operating under the Megamart brand, which reported revenue of RUB 17.4 billion. The majority of the convenience stores are located in Moscow and the Moscow region (1,329 outlets) as well as the St. Petersburg region (458 outlets).
Dunning added that upon completion of the transaction, Magnit, which posted a 4.1% increase in like-for-like sales in its first quarter, will "significantly strengthen" its market position in Moscow and St. Petersburg, which are "strategically important" for the group's further expansion across the country.
"High-quality locations, well-known brand and a 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."
The total selling space of the assets to be acquired is approximately 854,000 square metres, with 90% of the selling space in the convenience business rented, and the majority of the space in the superstore format company owned.
The acquisition also includes five distribution centres, with a total space of 189,000 square metres, located in Moscow, St.Petersburg and the Chelyabinsk region.
The deal price is based on the current enterprise value of RUB 92.4 billion, and is subject to certain adjustments depending, among other things, on the net debt and net working capital changes calculated as of the closing date.
Magnit added that its 2021 store opening, redesign and capex guidance, published in February of this year, remains unchanged, as do its 2021-2025 long-term targets.