Magnit offered to buy shares from non-residents

“Magnet” announced a tender offer, under which the company’s structure is ready to buy out up to 10% of the retailer’s shares at a price of 2215 rubles. a piece. The offer is primarily aimed at non-resident shareholders who currently do not have the opportunity to participate in trading in the company’s shares. It is also addressed to JPMorgan Chase Bank NA in relation to Magnit shares, which are held in the custody account of the depository programs, the retailer said in a statement.

“Such investors may take the opportunity to sell their shares and receive payment for them in various currencies in their overseas bank accounts. Magnit emphasizes that participation in the tender offer is voluntary, and investors should independently evaluate the merits of the tender offer and make their own decision as to whether they would like to participate in the tender offer or retain their stake in Magnit, in each case based on their position and specific circumstances,” follows from the messages of Magnit.

The offered price is half the value of Magnit shares at the close of trading on the Moscow Exchange on June 15 (slightly more than 4,500 rubles). By the evening of June 16, Magnit’s papers were trading at 4,830 rubles, up 6.88% after the announcement of the proposed buyout.

Until February 2022, investors from “unfriendly” countries accounted for a large volume of trading on the Russian stock market. And after the tightening of sanctions, the ban on the sale of securities by foreigners became one of the first measures to stabilize the situation on the market.

This decision gives foreign investors the opportunity to get something for their shares, taking into account the decisions taken by the government commission to agree on such a scheme, says Mikhail Burmistrov, CEO of Infoline-Analytics. According to him, this is a precedent decision, for the first time such a decision is available for private shareholders of public companies, and this is an important story, it opens up opportunities to start paying dividends.

A significant share of the securities in Magnit belonged to foreigners who could not do anything with their investments over the past 1.5 years, recalls Marat Ibragimov, an analyst at Gazprombank. The retailer has the highest free float among Russian companies (free float is 66.8% of Magnit’s papers) and the historically largest program of global depositary receipts (GDRs).

The main positive is that Magnet remains a public company, and also in the fact that the buyback of shares from “unfriendly” foreigners (even partial ones) opens the way to holding an AGM and electing competent management bodies, primarily the Board of Directors, as well as to the resumption of dividend payments, Ibragimov noted.

The company also released 2022 and Q1 financial results. 2023 At the end of last year, the total revenue of the retailer showed an increase of 26.7% and amounted to 2 trillion 352 billion rubles. At the same time, net retail revenue increased by 27.2% to RUB 2 trillion 299.7 billion. The net profit of Magnit decreased by 34.1% to 34.1 billion rubles. EBITDA for the year increased by 20.5%, amounting to 160.51 billion rubles.

Magnit is the largest retailer in Russia in terms of the number of stores and the second largest retailer in terms of revenue. As of December 31, 2022, the main shareholder of Magnit is Alexander Vinokurov’s Marathon Group, which owns 29.2%. Free float is 66.8%.