Russian retailer Magnit to buy fewer Dixy stores to comply with competition law

FILE PHOTO: The logo of Russian retailer Magnit is seen on a grocery store outside Moscow
FILE PHOTO: The logo of Russian retailer Magnit is seen on a grocery store outside Moscow, Russia February 27, 2018. REUTERS/Tatyana Makeyeva/File Photo

July 15, 2021

MOSCOW (Reuters) – Retailer Magnit’s purchase of rival Dixy was approved by Russia’s competition regulator on Thursday with the provision that 142 convenience stores be left out of the deal, the company said.

Magnit agreed in May to pay 92.4 billion roubles ($1.25 billion) to add Dixy’s 2,651 stores and five distribution centres in Moscow, St Petersburg and other regions to its portfolio and has said it still has room to make other acquisitions.

But on Thursday Magnit said the total number of outlets included in the deal would be around 2,500, in order for the company to comply with a 25% market share limit in certain locations.

None of the 142 stores excluded from the deal are in the key markets of Moscow or St Petersburg, keeping the strategic rationale of the acquisition unchanged, Magnit said.

The Federal Antimonopoly Service also stipulated that Magnit would have to reduce market share in 22 municipalities to 35% until July 1, 2021, which Magnit said could mean a limited number of store closures in those areas.

“The company doesn’t expect any significant changes to its market positions and financial performance in 2021 or going forward as well as its store opening guidance,” Magnit said.

($1 = 74.1351 roubles)

(Reporting by Anton Kolodyazhnyy and Anastasia Lyrchikova; Writing by Alexander Marrow; Editing by Katya Golubkova and David Evans)