Russian retailer Magnit has dropped plans to bid for smaller rival Lenta, paving the way for Severgroup, a company owned by Russian steel magnate Alexey Mordashov, to take over Lenta at about $1.75 billion, Kommersant reports.
Magnit this month will buy Lenta, Russia’s third-largest grocery retailer, seeking to thwart Mordashov’s plans.
On April 1, U.S. private equity fund TPG Capital and the European Bank for Reconstruction and Development (EBRD) agreed to sell their 42 percent stake in Lenta to Mordashov for $3.60 per global depository receipt (GDR). The same day, Magnit, the second-biggest retail company in Russia, made a non-binding, indicative proposal worth $3.65 per GDR, or $1.78 billion.
However, when asked on Tuesday whether the company planned to pursue the acquisition, a Magnit official said it was not considering any major deals at the moment.
Mordashov, whose Severgroup includes Russian steel producer Severstal, received approval from the anti-monopoly regulator to buy the stake from TPG and the EBRD last week.
Severgroup has now completed the purchase and launched a mandatory tender offer to acquire the remaining shares in Lenta, also for $3.60 per GDR, it said in a statement on Tuesday.
“We are delighted to welcome Lenta into the Severgroup family,” Mordashov said in the statement. Lenta, with a 3.2 percent share of the Russian food retail market, will add physical stores to Mordashov’s Utkonos business, Russia’s largest online grocery retailer.
“We want Lenta to maintain its public status after the mandatory tender offer closes…,” he added. The offer is valid until May 21, but may be extended for 14 days if Mordashov secures a stake of more than 50 percent.