Home Uncategorized Owner of the largest Russian retailer Sergei Galitsky withdraws from the business

Owner of the largest Russian retailer Sergei Galitsky withdraws from the business

Sergei Galitsky

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The owner of the largest Russian retailer Sergei Galitsky withdraws from his business, selling 30% of the company to the state-controlled VTB Bank. The Magnit supermarket chain 16,000 stores in Russia, generating an annual sales of 20 billion USD.
Sergei Galitsky is leaving the position of Chief Executive of the Magnit retail chain after selling a 29% stake to VTB Bank for 138 billion rubles (2.5 billion USD). And while Sergei Galitsky has gradually reduced his stake in the chain over the past few years, the market was surprised that he almost completely exits Magnit supermarket chain, retaining a share of only about 3%.
The sale is also priced at 3.9% lower than the closing price of the stock market on Thursday.
By 2016, the chain was Russia’s largest retailer when it passed the title of its rival X5 Retail Group (owned by billionaire Mikhail Fridman) for a slow sales growth.
Over the past 12 months, the company’s stock price has fallen by more than half, and on Friday it has reached its lowest point since 2012, after falling 7%.
According to Sergei Galitsky, his decision to withdraw from Magnit was taken for disputes over the management of the company with some of its other shareholders.
“Nothing is forever. I must not resist this process. If investors want changes, they need to get them”, said Sergei Galitsky in interview.
The speed of conclusion the deal, its relatively low price, and the fact that the buyer is a state-controlled bank, suggests that Galitsky has taken “an emotional and not a rational solution”, according to experts.
The main customer base of the stores was hit by rising inflation and a two-year recession in Russia. Currently, the consumer demand is recovering, though slowly, boosted by lower inflation and the stabilization of the ruble. Despite growing investor concerns about the acquisition of large companies in the oil and banking sector by state-owned firms over the past year and a half, the VTB has defended its deal, defining it as a new investment. The bank holds 3% from another Russian retailer – Lenta, as well as 27.5% from the telecommunication company Tele2 Russia.