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Media-Saturn to buy 15% stake in Russian retailer PJSC M.video

RBR Staff Writer Published 21 June 2018

CECONOMY’s major shareholder MediaMarktSaturn (Media-Saturn) has agreed to acquire 15% stake in Russian consumer electronics retailer PJSC M.video (M.video) for €258m from Safmar Group.

The purchase price is in addition to the transfer of entire business of Media-Saturn to Safmar.

The purchase price is subject to the agreed targets for this year and next year and could be reduced by up to €86m. Closing of the transaction is expected to take place this September.

M.video committed to join the European Retail Alliance and to become the third member next to Media-Saturn and Fnac Darty.

Media-Saturn will provide finance for the transaction in existing cash. Flexibility of further strategic actions can be maintained and strengthened, if CECONOMY considers to raise its share capital by up to 10%. Final decision has to be taken at a later point in time, the company stated.

CECONOMY CEO Pieter Haas said: “We are further expanding our pan-European relevance via strategic partnerships and consolidation. Through this new set-up of our Russian activities we are also taking a big step in solving our portfolio topics and optimizing our presence in Russia.

“Following the closure of redcoon and the turnaround of MediaMarkt Turkey, this transaction means that, from next year, we will turn losses into profits by disposing of the sub-scale MediaMarkt Russia business, whilst remaining present in the large and fast growing Russian Consumer Electronics market through our strategic stake in the market leader M.video.

“Likewise, M.video is committed to join us, by becoming the third member of the European Retail Alliance. The Alliance will then represent the largest CE volume worldwide with close to €34bn of combined company sales.”

CECONOMY stated that the agreement with M.video/Safmar can help in creating significant long-term value for the company and its shareholders. But, in the current financial year, negative effects on the company’s financial accounts are expected. Based on estimates, CECONOMY could have negative impact of €250m on its net income.

CECONOMY chief financial officer Mark Frese said: “After a thorough analysis of all our strategic alternatives, we have concluded that this transaction is the optimal way for us to remain active in a fast-growing country like Russia whilst reducing the risks to our balance sheet and eliminating losses.

“Not only will the deal lead to an immediate improvement in our profitability, but it will also underscore the broader benefits of implementing our strategic agenda to facilitate the consolidation of the European Consumer Electronics market.”

Image: Media-Saturn to acquire 15% stake in M.video. Photo: Courtesy of Media-Saturn-Holding GmbH.