Russia’s Magnit to Buy Dixy Retailer in $1.25 Billion Deal

Magnit PJSC, Russia’s largest grocery chain, plans to acquire Dixy Holding Ltd. convenience-store network in a 92.4 billion ruble ($1.25 billion) deal, a move that will boost its presence in Moscow and St. Petersburg.

The price may be adjusted on net debt and net working capital changes as of the closing date, according to a statement Tuesday. Pending regulatory approval, the deal is expected to close by Aug. 31, though that may be extended.

Russia’s biggest retailers, including Magnit and X5 Retail Group NV, are increasingly focused on low-income customers as incomes have stagnated since 2013, bolstering the success of hard discounters.

The acquisition will allow Magnit to add a “well-positioned discounter brand” in Russia’s two biggest cities and should help the retailer catch X5 in terms of revenue, BCS analyst Dmitry Skryabin wrote in a note.

Magnit operates over 21,000 stores, primarily in the convenience-store format. Dixy, owned by billionaires Igor Kesaev and Sergey Katsiev, operates more than 2,600 convenience stores concentrated in Russia’s two largest cities, 39 super stores under the Megamart brand and five distribution centers.

Magnit shares jumped as much as 4.5% in Moscow after the news, the most since Feb. 2 on an intraday basis.

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