M.Video seeks permission to buy rival Eldorado
MOSCOW. April 18 (Interfax) - M.Video , Russia's leading consumer electronics retailer, has taken the first step towards acquiring its chief rival Eldorado, a deal that has been discussed with varying intensity for several years.
A source familiar with the situation told Interfax that M.Video has submitted an application to buy Eldorado to the Federal Anti-Monopoly Service (FAS). National daily Kommersant reported the same on Thursday.
As of the end of the working day on Wednesday, the application had not yet been received by the regulator.
"The objectives of M.Video's management and board of directors are focused on growing the company's shareholder value. In our business - sales of home appliances and electronics - increasing scale and growth of volumes are key factors of success, and consolidation is one of the ways to ensure such growth. In the past five years, M.Video has repeatedly been a participant in negotiations with various players on the Russian market in regard to possible consolidation in the sector," M.Video spokesman Anton Panteleyev told Interfax.
"M.Video is beginning to study the prospects and advantages of various options for consolidation. If any decision is made, M.Video will make an additional announcement on this," Panteleyev said, refraining from comment in regard to Eldorado.
M.Video's principal shareholder is Cyprus-based Svece Ltd with 57.8% of shares in the retailer. Svece, in turn, is a wholly owned subsidiary of M.Video Investment Ltd., the controlling stake in which is held by Alexander Tynkovan. Mikhail Tynkovan and Pavel Breyev are also major shareholders of M.Video.
Eldorado is owned by the PPF Group of Czech businessman Petr Kellner, which consolidated 100% of the company in 2011 after buying out chain founder Igor Yakovlev; PPF owned 50% plus one share of Eldorado at the time. Ever since PPF's acquisition of the retailer the market has been expecting Eldorado to be sold to a strategic investor.
PPF told Interfax on Wednesday evening that it is not commenting on the report of M.Video's application.
M.Video management said back in 2011 that the company does not rule out M&A deals on the Russian market and is considering options for buying competitors or mergers with other players. Potential targets for acquisition that were mentioned were Eldorado and Technosila.
There were also reports in 2011 of a possible merger between M.Video and Eldorado. M.Video co-owner and president Alexander Tynkovan said that in the case of Eldorado there could be possible "integration" in future.
One of the possibilities discussed in the media had PPF selling Eldorado to M.Video but acquiring control of the merged company. However, commenting on this scenario, M.Video said neither party had made any official offers on a merger, while PPF called the reports of a possible merger "market rumors."
In the fall of 2011 there were reports that M.Video and Eldorado had ended negotiations on a merger.
M.Video was also interested in certain Technosila stores, but no deal followed, reportedly because Technosila's owners wanted to sell the chain as a whole.
Alexander Tynkovan, when speaking with reporters, has recently always stressed that the company does not see suitable acquisition targets and that M.Video's priority is organic growth.
