Lev Khasis left his post of CEO in X5 Retail Group only a month ago but he is ready to return to the retail business. He offered conflicting owners of St. Petersburg Lenta, August Meyer who owns 40.6% of the hypermarket chain and VTB Capital and TPG Capital funds that own 30.8% to sell him and other unknown investors up to 51% of the hypermarket chain for 1.2 billion dollars.
According to Lev Khasis, he seeks to buy 25-51% of the chain that has been evaluated at 2.4 billion dollars. Negotiations are in the early stage, that is, indicative proposal has been announced and meetings with representatives of major shareholders, August Meyer and VTB Capital and TPG Capital funds (owner of 30.8% of the chain) have been held. So far no binding paperwork has been signed.
According to some sources, Khasis does not have sufficient funds to buy Lenta on his own. He intends to attract financial investors. “Attracting investors for more than 1 billion dollars is quite a challenge”, says Aleksey Krivoshapko, head of Prosperity Capital Management. According to him, such a transaction would require finances from only field-oriented players who would agree to provide funds as they have assets in the retail sector. Lenta co-owner says that Mr. Khasis have not mentioned the names of potential investors.
Lenta chain (controlled by OOO Lenta owned by Lenta Ltd and registered in the British Virgin Islands) owns 39 hypermarkets in St. Petersburg and other cities. Sales in 2010 reached 70.6 billion rubles. At the end of 2010 Lenta ranked sixth in revenue among grocery retailers in Russia.
Litigation about control over Lenta has been in place for over a year now. August Meyer and a consortium of VTB Capital and TPG have different views. Two managers are nominated to fill the post of the CEO. The two men are a protégé of the funds, Jan Dunning, and Sergei Yushchenko, supported by Meyer. At the moment the hypermarket chain has no chief executive. Since the beginning of the year the two parties try to resolve the conflict through share purchase. On March 2, August Meyer offered VTB and TPG to sell their 30.8% of Lenta and the funds in return offered to arrange an auction in which each party would have the opportunity to buy shares owned by the opponent. August Meyer hired an investment bank Renaissance Capital that evaluated the chain at 2.6 billion dollars after deducting the debt of 300 million dollars, and the funds offered to begin the auction with a starting price of 2 billion dollars. The deal with Lev Khasis is regarded as one of the options to resolve the conflict.
Lev Khasis is not the first side investor ready to reconcile Lenta shareholders. In early March VTB discussed selling its stake in the chain and share that belongs to a few minority shareholders (amounting to more than 50% of the chain’s shares) with Nafta Moskva owned by Suleiman Kerimov and X5 Retail Group controlled by Alfa Group. The funds have also received an offer from the owner of Seventh Continent, Alexander Zanadvorov, who estimated the price of the whole chain at 2 billion dollars. A source close to Alexander Zanadvorov said that his offer was rejected after Lev Khasis made his.