"An increase of 5% in Lenti's share prices occurred following announcements of intentions to acquire Magnit hypermarkets"
Revamped Article:
Shares of Lenta hypermarkets skyrocketed on the Moscow Exchange, reaching an astonishing peak of 1548 rubles. By midday, the growth had settled, with Lenta shares trading at a still-impressive 1475 rubles. Magnit shares, too, saw a surge, peaking at 4055 rubles, before settling at a 1.5% increase.
The sudden surge in Lenta's stock prices can be attributed to whispers of a potential retailer's plan to gobble up Magnit's hypermarkets. Rumors suggest that it's unclear if this potential deal will involve all or just some of the hypermarket locations. One insider hinted that Magnit is considering shutting down all their hypermarkets and supermarkets to focus on developing smaller, more manageable formats.
Insider Tips:
Magnit refused to comment on our website's request. A representative of Lenta's Board of Directors' Chairman, Alexei Mordashov, maintained silence on market rumors and potential M&A deals.
Analysts at BCS believe that unloading the hypermarkets and supermarkets could help Magnit reduce its debt. By the end of 2024, the net debt/EBITDA ratio would reportedly be 1.5x without rental obligations, according to BCS. This revenue-generating category brought Magnit 267 billion rubles in 2024, equating to 9% of their total revenue. It's worth noting that large-format stores are ceding their share of the Russian market, BCS points out.
"The possibility of selling hypermarkets and supermarkets may not come as a surprise," the analysts opined, "and selling the entire segment could offset the costs of buying a controlling stake in the premium supermarket chain Azbuka Vkusa this year."
However, the specifics of the potential deal remain under wraps, making it hard to estimate its true scale. Both the operational and financial indicators of Lenta and Magnit could be affected, but it's too early to tell, adds PSB.
The sudden surge in Lenta's stock prices might be due to ambiguous rumors about a retailer's plan to acquire Magnit's hypermarkets, potentially affecting the entire retail industry in finance. If Magnit decides to sell their hypermarkets and supermarkets to focus on smaller formats, it could help Magnit reduce debt and restructure business, as suggested by BCS analysts.
