Russian retailer Magnit said it plans to buy back approximately 21.5% of its shares, finalising the results of a tender offer that could enable some Western investors to sell off blocked Russia holdings, albeit at a discount.
The offer to buy back shares at a 50% discount, a requirement demanded by the Kremlin, is the first proposal of its kind by a Russian company since sweeping Western sanctions over Moscow's invasion of Ukraine and subsequent Russian countermeasures deprived many foreign investors of the ability to trade in Russian securities.
Magnit, Russia's second-largest retailer with almost 28,000 food and home goods stores across Russia and Uzbekistan, initially offered to buy back 10% of its shares, but ended up tripling the offer to almost 30% after strong demand from Western investors.
Magnit's wholly-owned subsidiary Magnit Alyans will purchase 21,905,943.8 shares, representing approximately 21.5% of all issued and outstanding shares, Magnit said in a statement.
Magnit's Moscow-listed shares hit a near 20-month high on Wednesday, last trading up 0.7% at 5,940 roubles each.
With the buyback price previously set at 2,215 roubles per share, the value of the deal would amount to around 48.5 billion roubles ($538.7 million).
"The final number of shares purchased in the tender offer will be announced upon completion of settlement procedures," Magnit said.
Magnit said shares must be transferred to the buyer, after which payment will be made, with the whole tender offer scheduled to conclude on around Aug. 10.
Participants in the tender offer were given the option of receiving funds in roubles, dollars, euros or yuan in bank accounts in Russia or abroad.
More than 60% of Magnit's shares are free-float, with shareholders including major global asset managers, Refinitiv data shows.
JP Morgan, in an investor circular dated July 12, said "it was actively seeking to recover" shares in Magnit, which underpinned depositary receipts (DRs) JPM had issued to investors before Russia's invasion of Ukraine.
Magnit obtained government approval for the share buyback, something Western executives have said is a lengthy and difficult process.
Two sources with knowledge of Magnit's plans have told Reuters that should Magnit's offer succeed, it could open the door for other companies to follow suit and allow Western investors to recoup more blocked funds.