Mergers and acquisitions: 2019 most high-profile deals in retail, logistics and development

Active Dragon Capital, Khmelnitsky is returning to development, SEC Respublika has found new owners, Shostak and Kiptyk began to develop the retail real estate direction and other corporate news of retail and related industries.

In 2019, the investors’ main attention was focused on commercial real estate – warehouses and shopping centers, and besides often transactions were executed at a significant discount. Partly, the same can be said about retail, where more successful players bought their competitors.

Non-food retail

ProStor and Cosmo

On September 19, 2019, the Antimonopoly Committee of Ukraine allowed the Owner of the ProStor stores’ chain Vadim Tugay to acquire indirect control over the Kosmo drogerie retailer.

Kosmo as of September 2019 had 104 outlets in 27 cities of the country with the warehouse in Brovary, Kiev region. If the agreement will be signed, Prostor will come in second place in terms of the outlets’ number in Ukraine in the perfumery and cosmetics products stores’ segment after the EVA chain.

TAS Group and Cosmo Pharmacy Chain

In January 2019, the TAS business-group of Sergey Tigipko bought from the investment company SigmaBleyzer the Cosmo pharmacy business, which has 28 pharmacies in Kiev and the region. The TAS pharmacy chain was created in August 2009 within the rebranding of the Dasha pharmacy chain, which in 2008 became part of the TAS group. By the 2019 beginning, the pharmacies’ chain totaled 144 points, and in the near future Sergey Tigipko is going to expand it to 500 pharmacies.

EssilorLuxottica and Luxoptica

On the eve of 2020 New Year, the Antimonopoly Committee of Ukraine allowed to purchase the Ukrainian Luxoptic optics chain. The buyer may become the well-known French-Italian holding EssilorLuxottica.

Luxoptika Holding belongs to Nadezhda Shalomova, wife of ex-head of the Presidential Administration of Ukraine Boris Lozhkin, and Co-owner of the Dobrobut medical chain Oleg Kalashnikov. The chain has 176 optics. Luxoptics has been operating in Ukraine since 1994.

The French-Italian holding EssilorLuxottica is one of world’s largest players in the lenses’ market, optical equipment and glasses. It was created in October 2018 after the merger of Luxottica (Italy) and Essilor (France).

Go Sport Group (France) and Sportmaster Operations (Singapore)

On September 30, 2019, the transaction on the acquiring of GO Sport Polska sports stores’ chain was completed between Go Sport Group (France) and Sportmaster Operations (Singapore).

Sportmaster Operations acquired 34 GO Sport stores with 37, 000 sq. total sales square. The value of the transaction was not disclosed. At first, Sportmaster will operate in Poland under the existing brand, but will later rename stores.

Commercial property

Dragon Capital bought SEC Smart Plaza Obolon, Arctic logistics complex and warehouses near Kharkov

In 2019, Dragon Capital company continued to invest in both retail and warehouse real estate, remaining the most active player in this market.

In April, the investment company announced the purchase of SEC Smart Plaza Obolon in Kiev with 15, 000 sq. m total square, of which 10,000 sq. m – rental. In March, the agreement was closed on the purchase of the capital’s SEC Aladdin with ​​16,466 sq. m from the company Meyer Bergman.

Dragon Capital is also rapidly expanding its warehouse real estate portfolio: in December, it received permission from the Antimonopoly Committee of Ukraine for the purchase of the Class A warehouse complex with ​​12,000 sq. m near Kharkov through participation in the authorized capital of the company UC Real Estate. And the year the investment company began with the acquiring of Arctic logistics complex from Oschadbank with ​​21,500 sq. m near Kiev.

The company also looked closely at the purchase of SEC Ocean Plaza, which eventually went to other investors.

A third of the shares in SEC Ocean Plaza were bought by Vasily Khmelnitsky

Ukrainian businessman and Founder of UFuture Vasily Khmelnitsky buys 33.5% of one of the most successful Kiev SEC – Ocean Plaza. As the businessman himself explained, he decided to buy shares in the SEC, including because he was well acquainted with this object with 165,000 sq. m total square. In 2012, he and his partners sold SEC Ocean Plaza, and now there is an opportunity to re-acquire a stake in the facility on “fairly favorable terms”.

According to him, there is a steady trend in the market towards an increase in such objects’ cost, so the businessman does not exclude the possibility of reselling, as retail is not a profile direction for UFuture company.

SEC Respublika Sale

The little-known company Soltex Capital acquired in early 2019 the main unfinished capital – SEC Respublika for more than UAH 777 million. According to NV Business, the company plans to complete one of the largest SEC in the capital. According to media reports, work can be completed in 18 months. Respublika is one of the largest SEC’s in Kiev with square ​​about 300,000 sq. m, the construction of which began in 2012 and was frozen in 2015.

Claim rights for loans, where SEC Respublika acted as collateral, were sold for several years. The project was implemented by Megapoliszhilstroy company, which is associated with businessman Dmitry Firtash, and the investment’ amount in construction was estimated at $350 million.

Dmitry Firtash sold the capital’s Arena City shopping mall to Sergey Tigipko

According to the NV portal, the deal amounted to $13-15 million. This is about premises with 14,000 sq. m total square, including 10,000 sq. m – rental. Three sources confirmed the deal’s information: Director of shopping centers’ chains, the real estate consultant and the investment banker. Representatives of Group DF and Sergey Tigipko did not provide comments.

Dmitry Firtash’ structures have been selling the businessman’s real estate assets for the past few years. In September 2016, the Oligarch handed over to his partner, Developer Vagif Aliyev, 50% in the Parus business-center, and also got rid of several other objects.

Metropolis SC Metropolitan passed into the management of the Co-owner of Varus and Eva chains

Last summer, it became known that the Kiev Metropolis shopping center would soon be go under the Kroppers Group company’ control. It is part of the Olvia trading and production corporation of the Dnepr businessman Valery Kiptyk. Information on the shopping center’ sale was confirmed to RAU by several sources in the market: a large investment company’ managing partner and a consulting agency co-owner working in the commercial real estate sphere.

SC Metropolis was built in 2005 on 12 Malinovskogo Str., next to the Obolon metro station. The shopping facility is the four-story building with 33,000 sq. m total square, of which 15,000 sq. m – rental. The management of the shopping center in recent years has been carried out by the Ukrainian Innovation and Finance Company (UIFC).

SEC Magellan’ sale in Kharkov

In 2019 autumn, the little-known company Zolotaya Niva acquired the Kharkov SEC Magellan for UAH 250 million. According to LIGA.net, Deposit Guarantee Fund for Individuals held an “English” auction to sell SEC Magellan in Kharkov, previously owned by VTB Bank. According to the report, the winner of the auction was PJSC “Zolotaya Niva 1”, which offered UAH 245.9 million for the lot, despite the fact that back in this year May, the Deposit Guarantee Fund for Individuals was selling the asset at a price UAH 779.3 million.

Recall that VTB Bank received the Kharkov SEC Magellan from the Ukrainian businessman Anatoly Yurkevich’ structures in repayment of debt to the financial institution. However, later VTB became the first bank with Russian state capital withdrawn from the Ukrainian market.

Logistics and e-commerce

Skarbnitsya OKKO and Meest

In October 2019, the pawn shops’ national chain Skarbnitsya and the international group of companies Meest announced the beginning of cooperation. It was planned that the postal service would be available in more than 100 Skarbnitsya’ branches throughout the country by the 2019 end. In total, there are about 400 branches of Skarbnitsya in 97 cities.

The Head of the innovation department of the Skarbnitsya national chain, Sergey Makhota, noted that the installation of post-offices will attract new customers to pawn shops. Customer service will be available 24/7.

Last spring, the post-logistics operator Meest Express and OKKO company agreed to open mini-branches and install post-offices at gas-stations complexes of the OKKO chain. Mini-branches and post-offices also work around the clock.

Marketing Director of the OKKO chain Vasily Dmitrov believes that the Meest Express mini-branches harmoniously fit into the OKKO chain’ concept, as it expands the range of services for customers in one place. Meest Express mini-branches have already earned 150 OKKO filling stations in all regions of Ukraine.

Zakaz.ua and Furshet

Since October 2019, the Zakaz.ua delivery service began to deliver products from the Furshet shops. Cooperation began with a store at 1 Inzenernaya str. Delivery will cover Darnitsky, Dnepr and Pechersky district.

The new service will make it possible to order the entire assortment of Furshet supermarket goods, which includes more than 20,000 SKU.

Zakaz.ua already provides food ordering and delivery services from the largest retail grocery chains in Ukraine: METRO, Auchan, Novus, Fozzy and Megamarket. Zakaz.ua was founded in 2010. The company operates in 8 cities of Ukraine (Kiev, Kharkov, Dnepr, Odessa, Lvov, Zaporozhe, Vinnitsa and Zhytomyr).

Failed transactions

It cannot be ignored the failed transactions. So, Arricano refused to sell Zaporozhe SEC City Mall and SEC Solnechnaja Galereya in Krivoy Rog. Previously, negotiations on the purchase of two regional shopping and entertainment centers were conducted Ukraine’s largest investment company Dragon Capital.

This was reported by the NV portal, referring to the message from Arricano Real Estate on the London Stock Exchange website. “Arricano has developed updated strategies for Sun Gallery and City Mall centers, which, in its opinion, will increase its value and effectiveness. As a result, negotiations with Dragon Capital Investments on the sale are no longer underway”, – the news portal quotes the message.

Recall, at July last year end, Arricano, also managing metropolitan SEC’s Prospect and RayON, announced the achievement of a preliminary agreement with Dragon Capital Investments Limited and other companies regarding the regional facilities’ sale. At the same time, the Arricano press service specified that proceeds from the transaction were intended to be used for the portfolio’ developing and the company positions’ strengthening.

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