TIDMLNTR TIDMLNTA
RNS Number : 8684V
Lenta International PJSC
16 December 2021
Press Release | St. Petersburg | 16 December 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Lenta to Acquire Utkonos to Become One of Russia's Leading
E-grocery Platforms
Key highlights:
-- The contemplated acquisition will enable Lenta to expand its
online market share and acquire unique competences and loyal
customer base.
-- The base purchase price for the transaction is RUB 20
billion.
-- Consideration to be financed by an additional issuance of
shares of Lenta IPJSC to be placed by closed subscription to
Severgroup in which Severgroup commits to pay into the share
capital of Lenta IPJSC the amount of RUB 20 billion and other
shareholders have preemptive rights to acquire additional shares.
The subscription price for this issuance will be RUB 1,087 per
share.
-- The transaction was approved by a Special Committee of
Lenta's Board of Directors; the additional share issue is subject
to shareholder approval at the extraordinary general meeting of
shareholders to be held on 11 February 2022, for which the record
date is 19 January 2022.
St. Petersburg, Russia, 16 December 2021: Lenta IPJSC (LSE:
LNTA, MOEX: LNTA and LENT), one of the largest multi-format retail
chains in Russia, today announces an agreement to acquire
online-retailer Utkonos to create a leading e-grocery platform
covering all key shopping missions and market segments. The sale is
structured as the purchase of the entire participation interest of
LLC "Noviy Impuls-50" from Severgroup LLC (in such capacity, the
"Seller"). The base purchase price for the transaction is RUB 20
billion, which will be financed by an additional issuance of
Lenta's shares to be placed by closed subscription to Severgroup,
in which other shareholders may participate by exercising
preemptive rights to acquire additional shares, with Severgroup
committing to pay into the share capital of Lenta IPJSC the amount
of RUB 20 billion.
The acquisition of Utkonos will enable Lenta to significantly
expand its online market share with an additional delivery platform
featuring a loyal customer base, unique competencies and
competitive advantages and the ability to compete in the Moscow
online market more effectively, especially within the upper-middle
and premium segments.
Utkonos Overview
Utkonos is an online-only food retailer based in Moscow and is a
pioneer of the e-grocery segment in Russia. In 2020, Utkonos' share
of the Moscow e-grocery market amounted to approximately 10%.
Outside Moscow and Moscow region, Utkonos also delivers orders in
the cities of Kaluga, Tver, and Tula. In 2018, 2019, and 2020,
Utkonos' revenue was RUB 8.5 billion, RUB 8.6 billion, and RUB 14.3
billion, respectively. In 2020 Utkonos reached 2.7 million orders
with an average ticket of RUB 5,359. In 1H 2021, Utkonos total
sales increased by 11% compared to the same period of the prior
year to RUB 7.8 billion.
Currently, Utkonos operates two wholly owned warehouse dark
stores totaling 80,000 square meters and two rented dark stores
totaling 21,000 square meters, located in Moscow and Moscow region.
The company utilizes its own logistics and fulfillment
infrastructure consisting of 920 vehicles.
Utkonos unique assortment constitutes more than 85 thousand SKUs
with the widest fresh assortment amongst online and offline
food-retailers in Russia. Utkonos offers affordable goods of the
highest quality under six own brands, with a total assortment of
private label goods of more than 400 SKUs.
Utkonos customers can place orders through the website or via a
convenient mobile application. During 9 M 2021, Utkonos had more
than 330,000 customers.
Relationship of the parties
The Seller owns 100% of the share capital of "Noviy Impuls-50"
LLC, which operates the Utkonos business. The Seller is also a
major shareholder of Lenta, owning 77.99% of Lenta's shares,
representing 78.73% of the voting rights.
Transaction Details
Given Severgroup LLC's common ownership of Lenta and Utkonos, an
independent committee of the Board of Directors (the "Special
Committee") was formed, to review, consider, negotiate, and approve
the transaction and to consider the contemplated additional issue
of shares by closed subscription to fund the transaction. The
Special Committee is comprised of Lenta's three independent
directors, and chaired by Stephen Johnson, the senior independent
director.
A thorough due diligence and valuation process was conducted
through the engagement of an international Big 4 consultancy,
evaluating Utkonos' business model, recent performance, and future
growth prospects.
The Special Committee also engaged Citigroup Global Markets
Limited ("Citi") as its financial adviser to render an opinion to
the Special Committee regarding the purchase price payable by Lenta
in the transaction and received an opinion, dated 14 December 2021,
of Citi to the effect that, as of such date and based on and
subject to various factors, assumptions and qualifications, such
purchase price was fair, from a financial point of view, to Lenta.
[1]
The Special Committee unanimously approved the transaction, and
in accordance with Lenta's charter, the Board of Directors approved
the transaction. In light of the interest in both Lenta and the
Seller, Mr. Mordashov did not vote on the deal approval at the
Board meeting. The Company's Board of Directors also adopted the
decision to convene the Extraordinary General Meeting (the "EGM")
to approve the increase of the share capital through additional
issuance of shares by closed subscription to finance the
acquisition.
Transaction Closing
Under the terms of the purchase agreement, the entire
participation interest of LLC "Noviy Impuls-50" is to be
transferred to Lenta by the first week of February 2022 while Lenta
is expected to make payment to the Seller following its receipt of
funds generated by the share placement described below. The base
price of RUB 20 billion is subject to adjustment for cash held by
Utkonos at completion (Utkonos will have no financial indebtedness
at completion).
The combined online business unit will be titled Lenta-U.
Following the deal completion, Danny Perekalsky, CEO of Utkonos,
will take the position of the CEO of Online business unit Lenta-U.
Danny will be responsible for shaping the strategy, executing the
expansion of Lenta's Online business, and ensuring the Online
business achieves its key operational and financial targets. Danny
will report directly to the CEO, Vladimir Sorokin. Dmitry Skiba
will take the position of the Deputy CEO of Online business unit
Lenta-U.
Share placement by way of Closed Subscription
In order to finance the transaction, Lenta will place an
additional issue of ordinary shares through a closed subscription
to Severgroup LLC (the "Subscription"). Other shareholders, as of
the record date for the EGM, may use their preemptive right to
acquire additionally issued shares, if they did not participate in
the voting or voted against the Subscription.
The EGM to approve the increase of the share capital by the way
of the Subscription will be held on 11 February 2022, in the form
of absentee voting. The record date for compiling the list of
persons entitled to participate in the EGM is 19 January 2022.
Severgroup LLC has confirmed to Lenta that it plans to vote in
favor of the increase of the share capital at the EGM.
For this purpose, a GDR holder cannot exercise preemptive rights
in the Subscription. Accordingly, if a GDR holder wishes to be in a
position to exercise preemptive rights to acquire the shares
additionally issued by the closed subscription, the holder's GDRs
must be converted into shares no later than 19 January 2022.
Shareholders of record as of 19 January 2022 (so long as such
shareholder did not participate in the voting or voted against the
Subscription) will have a period of at least 45 days from the date
of notice is given or publicly disclosed by the issuer during which
to exercise their preemptive rights. For guidance on how to convert
GDRs into shares, please access this link:
http://www.lentainvestor.com/en/investors/shareholders/shareholder-capital
.
It is anticipated that in the Subscription, approximately RUB
25.643 billion worth of shares would be offered at a subscription
price of RUB 1,087 per share, as was approved by the Board of
Directors based on the 3-month volume-weighted average price (VWAP)
for GDRs traded on the Moscow Exchange as calculated on 14 December
2021 . Severgroup LLC has given a firm commitment to Lenta to pay
into the share capital of the Company the amount of RUB 20 billion
by the exercise of its rights in the Subscription and acquisition
of 18.4 million shares, subject to timely execution of the
transaction and the Subscription. To the extent other shareholders
exercise their preemptive rights or Severgroup purchases shares in
excess of its commitment, Lenta will use the resulting proceeds for
general corporate purposes.
The Company will provide further information regarding the
Subscription in due course.
Guidance
As the transaction will close next year, Lenta's full year 2021
guidance remains unchanged. The Company will provide full year 2022
guidance together with its Q4 and FY 2021 results announcement in
February 2022.
The Company reserves the right to revise its guidance during the
course of the year or when additional information regarding the
effect of the ongoing events becomes available.
Vladimir Sorokin , Lenta Chief Executive Officer, commented:
"The acquisition of Utkonos enables Lenta to significantly
enhance our online competitiveness in Moscow with an additional
delivery platform featuring a loyal customer base, unique
competencies, such as ultra-wide unique assortment, strong
fulfillment infrastructure and high client satisfaction rates.
Together, Lenta Online and Utkonos will create a comprehensive
online offering covering all key shopping missions and market
segments.
This deal is closely aligned with Lenta's strategic priorities,
which we determined and announced earlier this year. The
acquisition of Utkonos will allow Lenta to grow our online business
and overall food retail business in Moscow, which is one of our
strategic regions where we chose to compete.
Utkonos will become part of Lenta's online business division.
The combined online business unit will retain unique competencies
and teams inherent to the Lenta Online and Utkonos brands. Together
with Utkonos, we will be able to provide the full scope of online
delivery services, from express delivery from our Mini Lenta
convenience and supermarkets to planned or scheduled delivery from
Utkonos dark stores. We see a strong cultural fit between Utkonos
and Lenta Online and are pleased to welcome over 5,200 new
colleagues from Utkonos to the Lenta family."
Steve Johnson, Lenta Senior Independent Director, added:
"Online is an important element of Lenta's strategy and the
acquisition of Utkonos is in line with the Company's strategic goal
to reach 10% share of Russian e-grocery market by 2025.
As the Chairman of the Special Committee, I can confirm that we
have carefully reviewed the investment proposal taking into account
the independent valuation and the fairness opinion that was
rendered to the Special Committee. As such, we believe this
transaction will bring additional value for all of Lenta's
stakeholders."
The individual responsible for releasing this announcement is
Tatyana Vlasova, Head of Investor Relations
For further information, please visit www.lentainvestor.com or
contact:
Lenta Lenta
Tatyana Vlasova Mariya Filippova
Head of Investor Relations Head of Public Relations and
tatyana.vlasova@lenta.com Government Affairs
maria.filippova@lenta.com
EM (International Media Inquiries)
Lenta@em-comms.com
About Lenta
Lenta IPJSC (LSE: LNTA, MOEX: LNTA, LENT) is a leading Russian
multi-format food and FMCG retailer. The company operates
hypermarkets, supermarkets, and recently launched a new proximity
store format under the brand "Mini Lenta." It also provides
customers the option to shop online via its click-and-collect and
express delivery services. Lenta is Russia's largest hypermarket
operator and the fourth largest food retailer overall by Sales. The
company was founded in 1993 in St. Petersburg and as of September
30, 2021, operated 255 hypermarkets and 419 supermarkets in 88
cities across Russia with more than 1.7 million square meters of
Selling Space. The average Lenta hypermarket has approximately
5,500 square meters of selling space, the average Lenta supermarket
has 800 square meters, and the Mini Lenta format is 500 meters on
average. The company operates 14 distribution centers to supply all
of its stores. 2020 Revenues were RUB 445 billion (approximately
USD 6 billion).
Forward-Looking Statements
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements." These forward-looking
statements can be identified by the fact that they do not only
relate to historical or current events. Forward-looking statements
often use words such as "anticipate," "target," "expect,"
"estimate," "intend, " "expected," "plan," "goal," "believe," or
other words of similar meaning. By their nature, forward-looking
statements involve risk and uncertainty because they relate to
future events and circumstances, a number of which are beyond
Lenta's control. As a result, actual future results may differ
materially from the plans, goals, and expectations set out in these
forward-looking statements. Any forward-looking statements made by
or on behalf of Lenta speak only as of the date of this
announcement. Except as required by any applicable laws or
regulations, Lenta undertakes no obligation publicly to release the
results of any revisions to any forward-looking statements in this
document that may occur due to any change in its expectations or to
reflect events or circumstances after the date of this
document.
[1] Citi's opinion was rendered solely for the information of
the Special Committee, may not be relied upon by any other party,
does not constitute a recommendation as to any matter, and also did
not address any related transactions (including the Lenta
additional issuance of shares to finance the transaction).
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