Cleary Gottlieb represented Magnit PJSC (Magnit), Russia’s largest retail chain by total stores, in its RUB 87.6 billion ($1.18 billion) acquisition of the DIXY retail chain, the fifth-largest grocery retailer in Russia, from Mercury Retail Group Limited.
The deal was structured by way of purchase of DIXY Holding Limited, a Cypriot holding company of a group operating 2,438 convenience stores under the DIXY brand and 39 superstores under the Megamart brand. The convenience stores are predominantly located in greater Moscow (1,319 outlets) and greater St. Petersburg (438 outlets), complementing Magnit’s existing footprint, with the remainder in the Urals. Magnit also acquired five distribution centers and a fleet of 700 trucks.
The transaction was signed on May 17, 2021, and closed on July 22, 2021 after the Federal Antimonopoly Service of Russia (FAS) granted its clearance to the transaction. In giving its clearance, FAS prescribed that 142 DIXY convenience stores in 53 Russian municipalities be excluded from the deal perimeter prior to closing. Magnit may additionally need to dispose very limited number of store in 22 municipalities by July 1, 2022, to fall below the 35% allowed maximum market share. In accordance with the FAS prescription, Magnit also has undertaken certain social responsibilities.
Founded in 1994, Magnit is one of Russia’s leading retailers, with its headquarters in the southern Russian city of Krasnodar. As of March 31, 2021, Magnit operated 21,900 stores (15,098 convenience stores, 471 supermarkets, and 6,331 drogerie stores) in 3,770 cities and towns across the Russian Federation.
Dixy Holding Limited had managed the DIXY group, which in 2020 was the fifth-largest grocery retailer in Russia, including the Dixy chain of stores with 2020 revenues of RUB 281.4 and Megamart superstores with 2020 revenues of RUB 17.4 billion.
Mercury Retail Group Limited is a holding company that was established in 2019 as a result of the merger of the DIXY and Bristol retail chains owned by Mr. Igor Kesaev and Mr. Sergey Katsiev with the Red&White retail chain owned Mr. Sergey Studennikov.