UPDATE: M.Video to buy Eldorado from Safmar for 45.5 bln rbl

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MOSCOW, Mar 22 (PRIME) -- Russia’s home appliances retailer M.Video will buy retail chain Eldorado from their parent company Safmar for 45.5 billion rubles excluding Eldorado’s liabilities, M.Video said in a statement on Thursday.

M.Video will take out a 40 billion ruble loan from VTB Bank on the pledge of stakes in M.Video Management and Eldorado and trademarks, and also use its own funds to finance the purchase. The merged company’s loan portfolio will rise to 47 billion rubles.

M.Video plans to maintain both brands after the merger and to raise their combined revenue to 450 billion rubles by 2022. The synergy effect of the merger is anticipated at up to 18 billion rubles in EBITDA terms in 2018–2020 and the aggregate EBITDA and net profit figures may double within five years.

The merged company’s net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio is expected to amount to 1.5x by the end of 2018.

The management team headed by M.Video founder and President Alexander Tynkovan and CEO Enrique Fernandez will manage the merged company.

The decision is yet to be approved by shareholders at an extraordinary general meeting on April 13.

The company will buy back shares from minority shareholders disapproving the deal at 401 rubles per share, which is close to the stock’s weighted average closing price on the Moscow Exchange over the past 12 months. The shares must be offered for a buyback during 45 days from the date of the meeting of shareholders, or until May 28.

Safmar bought a 57.7% stake in M.Video in 2017 and acquired Eldorado in 2016.

(57.4954 rubles – U.S. $1)

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