Support The Moscow Times!

Sedmoi Kontinent Plans $4Bln Sale

Alexander Zanadvorov, the owner of upper tier supermarket chain Sedmoi Kontinent, is preparing to sell the chain's managing company along with the rights to rent 130 of its 160 stores for a 15-year period.

The deal could be worth between $2.4 billion and $4.05 billion  a record in the retail sector.

X5 Retail Group, which recently conceded pole position on the Russian market to Magnit, will buy the chain, Kommersant reported Monday. The two parties are preparing to formalize the deal, a source said.

Sedmoi Kontinent, which will retain all rights to the chain's trademarks, will be sold for a symbolic sum. All real estate belonging to Sedmoi Kontinent will be spun off into separate companies that will remain in Zanadvorov's hands, and it is here that the money will be made.

The market rate for renting 1 square meter of retail space could be from $350 to $600 per year, said Svetlana Yarovaya of Jones Lang LaSalle. Multiplied by the 450 thousand square meters owned by Sedmoi Continent, this suggests yearly revenues of from $157 million to $270 million per year, and between $2.4 billion and $4.05 billion over the 15-year period of the agreement.

By value the sale leapfrogs the previous record acquisition in the sector: the purchase of the Kopeyka retail chain by X5 in 2010 for $1.6 billion.

Sedmoi Kontinent reported revenues of just under 63 billion rubles ($2 billion) and net profit of more than 3 billion rubles in 2012 under Russian accounting standards.

X5 Retail Group, which operates the trademarks Pyatyorochka, Karusel and Perekryostok, posted revenues of about $16 billion in that year.

The Sedmoi Kontinent brand name will most likely be dropped by X5, VTB's Ivan Kushch said, as the larger group already has its own multiple brand names, and the integration of a new one will only create difficulties for the company.

… we have a small favor to ask. As you may have heard, The Moscow Times, an independent news source for over 30 years, has been unjustly branded as a "foreign agent" by the Russian government. This blatant attempt to silence our voice is a direct assault on the integrity of journalism and the values we hold dear.

We, the journalists of The Moscow Times, refuse to be silenced. Our commitment to providing accurate and unbiased reporting on Russia remains unshaken. But we need your help to continue our critical mission.

Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and you can be confident that you're making a significant impact every month by supporting open, independent journalism. Thank you.

paiment methods
Not ready to support today?
Remind me later.

Read more