Russia's Sberbank in talks to buy retailer O'Key - sources

O'Key SA

11/04/2019 16:00

By Olga Popova, Tatiana Voronova and Polina Devitt
    MOSCOW, April 11 (Reuters) - Russia's largest lender
Sberbank  SBER.MM  is in talks to buy mid-sized food retailer
O'Key  OKEYq.L , six industry sources told Reuters.
    The talks follow a decline in the shares of many Russian
food retailers over the past year and expectations of upcoming
consolidation due to tougher sector regulation and a fall in
Russians' disposable incomes.
    If Sberbank agrees to buy O'Key, it may then sell it on to
another investor, said one of the industry sources and a source,
close to Sberbank's top management. They did not disclose the
name of the potential investor.
    Sberbank declined to comment. O'Key did not reply to a
Reuters request for comment.
    Russian steel magnate Alexey Mordashov said in early April
he would buy a major stake in O'Key's larger rival - Lenta
 LNTAq.L . Magnit  MGNT.MM , another major sector player
part-owned by Russia's second largest lender, VTB  VTBR.MM , has
also expressed its interest in Lenta.  urn:newsml:reuters.com:*:nL8N21J6UU
    O'Key has a market value of around $500 million, down 26
percent since the end of 2017. None of the Reuters' sources
disclosed the price of the potential deal.
    In August 2018, O'Key signed a non-revolving loan facility
agreement with Sberbank for 12 billion roubles ($186 million)
for the refinancing of debts.
    One industry source said the talks had slowed down a little
recently. The purchase, if agreed, will be for cash - not on a
debt-for-equity basis - and O'Key's discounter chain Da!, which
stands for Yes! in Russian, may be left out of the deal, the
source added.
    O'Key launched Da! in 2015 while taking a cautious stance on
expanding hypermarkets, its core business. In 2017, it sold its
supermarkets to market leader X5  PJPq.L .  urn:newsml:reuters.com:*:nL8N1SB2F6
    The company held talks with major sector players in recent
years about the sale of its hypermarkets but none of these
negotiations ended up with a deal. 
    It currently has three major shareholders - businessmen
Dmitry Korzhev, Dmitry Troitskiy and Boris Volchek, the company
said in a recent presentation. Reuters was unable to locate them
or their representatives.
($1 = 64.4375 roubles)

 (Reporting by Olga Popova, Tatiana Voronova, Polina Devitt,
Darya Korsunskaya and Maria Kiselyova; writing by Polina Devitt;
editing by Keith Weir)
 ((Polina.Devitt@thomsonreuters.com; +7 495 775 12 42; Reuters
Messaging: polina.devitt.reuters.com@reuters.net))