Dixy Group Completed Deal on Acquisition of Victoria Group
OREANDA-NEWS. June 20, 2011. DIXY Group - one of
Total amount of the transaction is RUR 25.6bn including Victoria Group's financial debt, cash and cash equivalents.
The transaction was largely financed by DIXY Group's funds raised through placement of 38,750,000 shares (additional issue) with pre-emptive rights for existing shareholders. According to the decision made on the 1st of June 2011 by the DIXY Group's Board of Directors, the price per share was set at RUR 391. Existing shareholders via their statutory pre-emptive rights acquired 32,766,134 shares of the additional share issue for the total amount of RUR 12.8bn. DIXY Group's controlling shareholder - MERCURY Group (DIXY Holding Limited) - fully exercised its pre-emptive right and acquired 24,558,613 shares. This transaction involved the exchange of 16,341,240 shares of DIXY Group, OJSC held by MERCURY Group (DIXY Holding Limited) for 33% shares of Victoria Group of Companies (held by selling shareholders) which were a part payment for shares of new issue.
After exercising of pre-emptive rights by existing shareholders, the DIXY Group placed 5,983,866 shares of new issue via open subscription, together with 1,113,849 treasury shares for the total amount of RUR 2.775bn. The Company's controlling shareholder - MERCURY Group (DIXY Holding Limited) - acquired 5,165,537 shares for RUR 2bn via open subscription.
In addition, to finance the transaction the Company arranged RUR 4.5bn loan from UniCredit Bank.
Thus, after the closing of the transaction the Company's charter capital consists of 124,750,000 shares, and the DIXY Group's ownership structure is as follows:
MERCURY Group (DIXY Holding Limited) - 67,887,188 shares (54.4%);
Since the 16th of June 2011, additional issue shares are tradable on the RTS stock exchange and tentatively starting from the 30th of June 2011 will be tradable on the MICEX stock exchange together with those of previous issues.
As agreed by main shareholders, the former beneficial owners of Victoria Group undertake not to sell their shares in DIXY Group within 12 months from the closing date. At the same time, they have the right to appoint one of the Directors of the DIXY Group's Board of Directors. The extraordinary general meeting of shareholders will be promptly convened for this purpose.
Prior to execution of the agreement, there were received all required approvals and permissions, including approval from Federal Antimonopoly Service of Russia.
Commenting on the closing of the transaction Ilya Yakubson, President of DIXY Group emphasized:
'This transaction marks an important strategic step for the development of the DIXY. It enables us to reach the target scale of procurement, logistics and marketing, and to claim ourselves as a full scale player in the 'Premier League' of Russian food retail. We aim to gain benefit from significant synergetic effect stemming from the combining of two companies' operations. Both retail chains perfectly supplement each other from the standpoint of regional presence and resemblance of the main format - neighborhood store. We welcome the opportunity to enhance the DIXY team by the Victoria Group team's managerial and operational competencies. Now we consider ourselves stronger, more efficient and effective, and more prepared to cope with current competitive and technological challenges for retail, we are also sure that the transaction will create significant additional value for the united Company's shareholders.'
As a result of this transaction, the DIXY Group increases turnover by more than 50%. Total stores number of the united chain (as on the 31st of May 2011) is 944 and overall selling space is 356 885 sq.m. The Company becomes the third largest among Russian national retail operators in the food retail market by revenue, selling area and number of stores. Acquisition of
Due to a significant increase of scale in the trade operations, DIXY Group will be able to significantly improve purchasing terms and to realize the existing potential with regard to optimization of logistics and transportation costs at the united Company. Major part of the synergetic effect is expected during 2012.
In the united Company, format 'neighbourhood store' is to be unified in conform with the recently adopted DIXY's new marketing strategy encompassing full marketing operation flow including, to name a few, pricing, assortment management, loyalty programmes, standards of service and communications, external and internal design of stores. Retail stores operated under the brand "Kvartal" in Saint- Petersburg and
The united Company will be headed by Ilya Yakubson, President of DIXY Group. The position of Chief Financial Officer will be taken by DIXY Group's Vice-President Fedor Rybasov - he will be managing financial departments of both companies, as well as corporate relations department. Victoria Company's General Director will be Oleg Zhunikov, directly reporting to the President of DIXY Group and being responsible for operational management and development of "
Transaction counsels were as follows:
On the Company's side - Skadden, Arps, Slate, Meagher & Flom LLP (Legal Counsel), Ernst & Young (financial and tax due diligence services), Attorneys at law - Jus Aureum (legal due diligence services);
On the MERCURY Group's side - Sberbank of Russia, OJSC (Financial Counsel);
On the side of the Victoria Group and its shareholders - Renaissance Capital, investment bank (Financial Counsel), Linklaters CIS (Legal Counsel).
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