Sberbank in Talks to Buy Russian Food Retailer O’Key

Russian company O’Key said on Friday that the country’s biggest bank, Sberbank, had expressed interest in the food retailer’s hypermarket business, Reuters reported.

Earlier, sources told the news agency that O’Key’s discount chain Da! could be left out of the possible deal. O’Key currently has a market value of about $554 million. The company has held talks with various parties in recent years over a sale of its hypermarkets.

The company’s board “confirms that it is evaluating various directions for development and strategic options for the company’s hypermarket business, including an indication of interest in this business from Sberbank,” O’Key said in a statement on Friday.

This evaluation is at a preliminary stage and no definitive proposals or decisions have been made, it added.

The talks follow a decline in the shares of many Russian food retailers over the past year and expectations of sector consolidation because of tougher regulation and a decline in Russian consumers’ disposable incomes.

Earlier this month, Russian steel tycoon Alexey Mordashov agreed to buy a 41.9 percent stake in food retailer Lenta. Mordashov’s Severgroup said it will buy the stake from U.S.-based TPG Group and the European Bank for Reconstruction and Development (EBRD), for a total cash consideration of $729 million.

If Sberbank agrees to buy O’Key, it could then sell it to another investor, a source close to Sberbank management told Reuters on Thursday. The source did not disclose the name of the potential investor.