Bloomberg News

Magnit May Sell Stock to Fund $1 Billion of Purchases

May 03, 2007

OAO Magnit (MGNT), Russia's second-largest supermarket chain, may sell shares on a local or international exchange to raise up to $1 billion for acquisitions.

The retailer will review proposals submitted by local chains, Oleg Goncharov, head of investor relations, said today by telephone from the southern city of Krasnodar, where the operator of discount food stores is based. He confirmed comments made yesterday by Chief Executive Officer Sergei Galitsky on a conference call with investors.

Local and international food retailers may spend as much as $4 billion this year to expand in Russia, where the food retail market is set to expand by 12 percent a year through 2010, UBS AG said in a Feb. 8 report. Magnit may raise capital spending to between $400 million and $500 million in 2007 from $301 million last year, according to Goncharov.

The grocer would consider both local and international markets for a share sale to fund possible acquisitions, Goncharov said. The company may decide on a share sale in London, he added.

An 18 percent stake in Magnit is publicly traded on the Micex Stock Exchange and the Russian Trading System in Moscow, the country's two largest equity markets.

Profit jumped 55 percent to $56.9 million last year on new stores and higher customer spending, Magnit said yesterday. Sales surged 59 percent to $2.51 billion as the company opened 393 outlets, bringing the total to 1,893 by the end of the year.

The retailer is also developing a superstore chain and has 14 hypermarkets under construction, as many as seven of which are scheduled to open this year, Goncharov said April 20.

The retailer's shares rose 6.50 rubles, or 0.5 percent, to 1,222.60 rubles on Micex today. They have surged 70 percent in the past 12 months, raising the company's market value to about 88 billion rubles ($3.4 billion).

To contact the reporter on this story: Maria Ermakova in London at mermakova@bloomberg.net.

To contact the editor responsible for this story: Keith Campbell at k.campbell@bloomberg.net


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