Russia's Magnit still has some room for deals after Dixy purchase, CEO says

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ST PETERSBURG, Russia (Reuters) – Russia’s Magnit, one of the country’s top retailers, still has some room to make acquisitions, albeit probably smaller ones, following its purchase of rival Dixy, Magnit CEO Jan Dunning told Reuters.

Last month, Magnit agreed to pay 92.4 billion roubles ($1.3 billion) to add Dixy’s 2,651 stores and five distribution centres in Moscow, St Petersburg and other regions to its portfolio.

The transaction will still leave Magnit’s net debt to core earnings (EBITDA) ratio at below 1.5 at the end of 2021, up from 1.1 at the end of last year, Dunning said.

“With 1.5 there still is a space to not to exclude M&As but I don’t know whether they may happen this year,” he told Reuters, adding any further deals were likely to be small ones.

Dunning, who previously worked for another large Russian retailer Lenta, said the Dixy deal should not harm Magnit’s ability to maintain dividend payments, but the board of directors has the final say.

“This (deal) will not jeopardise our ability to pay dividends in the way we have done … I don’t see a reason why the absolute amount per share would come down but the board may have a different view.”

Magnit, founded in Krasnodar in 1994 and with state bank VTB among its shareholders, paid out 304.19 roubles per share both on 2019 and 2018 results and 245.31 roubles per share on the first nine months of last year.

The board of directors is due to meet soon to decide on the final dividend on last year results, Dunning said.

($1 = 73.2530 roubles)

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