Russia’s Magnit Finalises Buyback Of Blocked Shares From Western Investors
Russian retailer Magnit has successfully completed a unique deal to repurchase shares that were previously blocked from Western investors. This marks the first instance of such a deal occurring since Russia’s invasion of Ukraine in February 2022.
The buyback offer, which was mandated by the Kremlin, involved shares being repurchased at a 50% discount. This novel proposal reflects the challenges imposed by the sweeping Western sanctions following Russia’s Ukraine invasion, which restricted foreign investors’ ability to trade Russian securities.
Magnit confirmed the repurchase of 16,910,664.8 shares from shareholders, constituting roughly 16.6% of all issued and outstanding shares. This transaction amounted to approximately RUB 37.4 billion (€350 million).
The retailer stated that it has successfully fulfilled around 200 orders from investors originating from various jurisdictions, including the USA, UK, Germany, Italy, Switzerland, Scandinavian countries, Singapore, Japan, Canada, Australia, and more.
While the settlement procedures for shareholders with stakes being cleared through Euroclear are still ongoing, Magnit clarified that the approvals received allow for the potential purchase of additional shares from non-resident shareholders.
The company indicated that it may explore various options for purchasing shares from shareholders who didn’t participate in the initial tender offer, which could include new tender offers and bilateral sale transactions at the tender offer purchase price.
Previously, Magnit had communicated that its wholly-owned subsidiary, Magnit Alyans, would repurchase about 21.5% of outstanding shares.
This figure was eventually increased to nearly 30% due to strong demand from Western investors, surpassing the initial offer.
The buyback process involved various international participants, including Magnit’s Global Depositary Receipt (GDR) program depositary bank, JPMorgan Chase Bank, along with other international investors such as hedge funds, sovereign wealth funds, and individual investors.
This buyback stands as an exceptional example of navigating complex financial and geopolitical challenges.