Segezha bidding for assets of foreign cos leaving Russia, questions synergy from possible purchase of IKEA factories

MOSCOW. Oct 31 (Interfax) - Segezha Group , the forestry division of Sistema PJSFC , is interested in assets its line of business that are being left in Russia by departing foreign investors and is making offers, but the competition for these assets is fairly strong, Segezha investor relations director Yelena Romanova said.

"We, of course, are carefully following what is happening on the market and, certainly, in our industry there is also an exodus of foreigners from Russia. We are carefully considering all of these opportunities," Romanova said at the Smartlab conference.

"In most deals we are participating as one of those who make their bids," she said. This is a "fairly complex process" because transactions involving the sale of foreign assets now require the approval of the government commission on foreign investment, Romanova said.

"There are many bidders, they are not only from our industry," she said, citing the example of Pharmstandard owner Viktor Kharitonov's attempt to acquire the Russian assets of packaging and paper company Mondi. This deal did not happen because it was not approved by the government commission.

Romanova did not comment on the due diligence done on IKEA's Russian factories, but questioned the advisability of acquiring them for Segezha, given that the key material used in the Swedish company's furniture is particle board.

"IKEA is largely particle board. Particle board is essentially pressed sawdust. This is the cheapest production waste and I don't even know what share of our revenue it accounts for, because its kopecks. That's the first point, that one should not expect any big synergy there, frankly. But IKEA is also being sold not in the form in which we knew it," Romanova said.

She recalled that it was initially reported that Seghezha's controlling shareholder, Sistema was interested in IKEA's assets. This interest was confirmed by Sistema's founder and former principal shareholder, Vladimir Yevtushenkov, business daily Vedomosti reported earlier.

Real estate developer PIK Group and Kronospan have also been mentioned in the media as possible buyers of IKEA's assets. PIK has denied plans to buy IKEA's Russian assets.