Alfa-Bank Co-owner buys one of the largest grocery chains in Spain

Russian billionaire Mikhail Friedman and his partners are ready to spend 800 million euros on the Spanish grocery retailer DIA’ purchase and make the company a market leader.

The great Spanish retailer DIA’ shareholders refused to offer additional issue, which was offered by the Board of Company Directors. This was announced by investory.news, citing Reuters. This opened the way for the implementation of the investment company L1 by Mikhail Friedman and his partners’ plan, who intend to fully redeem the Spanish retail chain and carry out its business transformation.

L1 was established in 2013 by Friedman and his partners in Alpha- groups, German Khan and Alexei Kuzmichev. The company is investing in international projects $ 14 billion, which it received for a stake in TNK-bp sold by Rosneft. The retail division of L1 Retail is planning to invest up to $ 3 billion. Its head, Stefan Ducharme, previously worked at the Russian X5 Retail Group, which manages the Pyaterochka, Perekrestok, and Carousel retail chains.

DIA is one of the largest supermarket chains in Spain. At 2019 beginning, 6157 owned and franchised stores operated in Spain, Portugal, Argentina and Brazil under the DIA brand.

The company managed to increase market share during the last recession in the Spanish economy. After that, the German discounter Lid and local retailer Mercadona began to actively invest in the Spanish market. In 2018, the DIA announced three warnings to lower profits, and its shares lost about 90%. The company’s net income in 2018 decreased by 11.3% – to 7.3 billion euros. The consolidated loss increased 2.6 times to 299 million euros, while net debt increased one and a half times – to almost 1.5 billion euros.

Now L1 with 29% share is the DIA largest shareholder. L1 has in free circulation – 58.4% by mid-February 2019, the Goldman Sachs Group has 5.7%, the rest owners have small packages.

For the first time, in early February the investment company L1 announced its intention to become the DIA sole owner and proposed a recovery plan for the company from three steps. First, L1 made an offer to other shareholders to repurchase their securities at € 0.67 per share. L1 will have to pay 296 million euros for this.

The L1 plan second step is to support the DIA additional issue for 500 million euros, subject to successful redemption and reaching agreements with the retailer’s creditor-banks. The third step is the launch of the retailer’ five-year transformation, based on “world-class expertise in retail”.

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