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

O'Key SA

11/04/2019 17:12

(Adds O'Key declined to comment, O'key share reaction in
paragraphs 4-5)
    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 and O'Key declined to comment.
    O'Key's global depository receipts (GDRs) rose in London
after the Reuters' story was published and were up 11 percent by
1608 GMT.
    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 had a market value of around $500 million as of
Wednesday's market close, 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 and Jane Merriman)
 ((Polina.Devitt@thomsonreuters.com; +7 495 775 12 42; Reuters
Messaging: polina.devitt.reuters.com@reuters.net))