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Retail

Russia's VTB Bank Fully Divests From Magnit

Russian lender VTB sold a 4.9% stake in food retailer Magnit via an accelerated bookbuilding (ABB) process at RUB5,700 (€68.61) per share, the bank said, as it fully divests its 17.28% stake in the company.

The deal will make privately-held Marathon Group Magnit's largest shareholder, with its stake rising to around 29.2%.

VTB bought its stake in the retailer, whose shops are sprawled across Russia, from its founder Sergei Galitsky in 2018, but previously said it would sell up eventually.

Marathon will pay around RUB72 billion (€870 million), Gazprombank senior analyst Marat Ibrahimov calculated, with the ABB bringing in around RUB28.5 billion (€340 million), giving VTB around RUB100.5 billion (€1.21 billion) in total.

Shares in Magnit plummeted more than 7% on Thursday (18 November), when the deal was first announced, but pared further losses on Friday to gain 0.5% as of 13:17 GMT.

Its shares look oversold in the short term, said Veles Capital analyst Elena Kozhukhova in a note.

Magnit had no immediate comment.

A Moderately Positive Sale For VTB

Broker Aton said the sale was moderately positive for VTB, which it calculated would be set to make a potential net gain of around RUB20-25 billion.

However, shares in VTB were down 4.1%, underperforming the wider market, which had shed around 2% due to falling oil prices.

VTB had initially said it was offering 4.4% via ABB, but later upped that to 4.9%. The terms were that Marathon would pay the same price for the shares as determined in the ABB.

'Long-Term Investment'

Marathon, which used its own and borrowed funds to finance the deal, said it wanted to grow Magnit's capitalisation and dividend yield, and see it become one of the most expensive retailers in the world.

"It is definitely a long-term investment," it said in a statement to Reuters. "We want to stay with this company for many years. We see huge potential for new formats, new client solutions and new markets."

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