Magnit, one of Russia’s leading grocery retailers, has reached an agreement to acquire the DIXY chain, which currently operates 2,651 stores in the country, for Rub 92.4bn (€1.25bn).
Convenience stores operating under the DIXY brand generated annual revenue of Rub 281.4bn ($3.82bn) last year, whilst the 39 superstores under the Megamart brand delivered revenues of Rub 17.4bn ($0.24bn). The majority of the convenience stores are located in the Moscow region (1,329 outlets) and St.Petersburg / Leningrad region (458 outlets).
The stores are said to be comparable in terms of size with existing Magnit convenience and superstore formats.
As part of the deal, Magnit will also acquire five distribution centres located in Moscow, St.Petersburg and the Chelyabinsk region.
Jan Dunning, President and CEO of Magnit, commented: “Upon completion of the transaction, we will significantly strengthen our market positions in both capitals, which are strategically important for Magnit’s further expansion in the country. High-quality locations, well-known brand and strong customer base in Moscow and St.Petersburg will allow Magnit to become one of the top-players in the respective regions.”
He added that its strong physical presence in Moscow and St.Petersburg would support the company’s plans to further develop its e-commerce activities.
The Dixy business will remain a separate legal entity with the stores operating under the existing Dixy brand.
Andrey Bodrov, Chief Investment and Strategy Officer, said: “This strategic deal offers unique exposure to important markets and also provides scope for further improvements of Magnit existing business. We believe that potential synergies in procurement, supply-chain management and other business processes combined with low cannibalization risk will be value accretive and deliver attractive returns to shareholders.”
