“MegaFon” and SLV group of Oleg Malis signed an agreement on the merger of retail chain networks “Euroset” and “Svyaznoy” as follows from the joint communication of companies. The consolidation takes place on the basis of the Cyprus company Dtsretail, which, according to a press release, owns the operating companies of Svyaznoy group.
Euroset group is owned by Euroset N. V., MegaFon owns it through its subsidiary Lefbord Investment. Under the terms of the agreement, Lefbord Investment will transfer 100% of Euroset N. V. shares to Dtsretail.
As a result, SLV group will become the controlling shareholder of the united company, and MegaFon structure should receive 25% plus 1 share. Lefbord Investment will also have two seats on the joint venture’s Board of Directors. The parties expect to complete the transaction by mid-may 2018.
“This deal reflects our strategy. We see huge potential in the connection of physical retail and online etail. The combined company is a training platform for our clients, which is an important element of the process of digitalization of the economy,” said the founder and key shareholder of the SLV group Oleg Malis.
“We believe that combining our successful retail network with a strong brand will allow us to better understand the needs of our customers, as well as improve the quality of service,” said CEO of MegaFon Sergey Soldatenkov.
He also expressed confidence that MegaFon “will benefit from working with an experienced and professional team that will manage the united retail company”.
“We also believe that the merger of Euroset and Svyaznoy is a logical step to optimize distribution channels on the mobile market, ” said Sergey Soldatenkov.
Association “Svyaznoy” and “Euroset” branded stores will create a company that will control more than 5 thousand own stores, noted in a press release. As a result of consolidation, the parties expect the launch of new products and services, expansion of partnerships and increase of financial performance.
“The combined company will continue active development of its own platform of online sales and implementation of Omni-channel strategy development”,— stated in the message.
At the end of 2017, the revenue of the combined company from online sales amounted to about 22 billion rubles.
The shareholders of “Svyaznoy” and “Euroset” were preparing for more than a year for the merger of the two retailers. In March 2017, it was assumed that this transaction would follow the reorganization of Euroset. In February, 100% of “Euroset” became the property of “MegaFon”, and half of the stores of the retailer have been transferred to the company “VimpelCom” (brand “Beeline”).
In the same month, Dtsretail sent a request to the Federal Antimonopoly Service (FAS) of Russia for the purchase of 100% of the voting shares of JSC “Svyaznoy Logistika” and the acquisition of rights to determine the purchase conditions of the four companies of “Euroset” group. The FAS agreed on this petition in the first decade of April issuing an order to ensure competition in the Chukotka Autonomous district.
Optimization of mobile operators’ presence in the retail business is beneficial for all market participants. “We are generally positive about the scenario in which MegaFon will become a minority shareholder of the united company on the basis of Svyaznoy and Euroset. First, in this case MegaFon will not have to consolidate the results of Euroset in its reporting. Secondly, the reduction of the severity of competition in the market would be beneficial to all its participants”