PARIS — Carrefour Group, the world’s second-largest retailer after Wal-Mart Stores Inc., is negotiating the acquisition of Sedmoï Kontinent (“Seventh Continent” in English), one of the largest Russian supermarket chains, according to industry reports.
This story first appeared in the February 25, 2009 issue of WWD. Subscribe Today.
Carrefour declined to comment on the speculation.
Olga Izimova, a portfolio manager at Pilgrim Asset Management in Moscow, said the deal, if it goes ahead, would allow Carrefour to “make a big entrance into the Russian market.” She explained a change of ownership has been expected for a long time, as Sedmoï Kontinent’s majority shareholder, former Russian billionaire Alexandre Zanadvorov, owes Deutsche Bank $560 million.
Among Russia’s few high-end supermarket chains, Sedmoï Kontinent caters to the country’s new middle class.
Meanwhile, other foreign chains are looking to enter the Russian market. Wal-Mart is said to have hired an executive to explore business opportunities there.
Cédric Lacasbae, head of retail research for Kepler Capital Markets in Paris, said the Sedmoï Kontinent acquisition, if true, would coincide with Carrefour’s long-announced plans to enter Russia by 2009.
“Rumors have been circling for months. But this is a much better time for them to do it than a year ago, as prices will be lower,” he said. “Today, it’s cheaper than yesterday, and tomorrow is cheaper than today.”
In September 2008, Carrefour announced it had signed a deal to invest up to $100 million in southern Russia’s Krasnodar region and outlined plans to open several hypermarkets and other retail outlets there over the next five years. Present in Russia through partnerships since 2007, Carrefour is expected to open two hypermarkets — in Moscow and Krasnodar, respectively — this year.
According to reports, Sedmoï’s net sales in 2008 rose 22.5 percent over 2007 in ruble terms. Gross revenues, including value-added tax, were 43.9 billion rubles, or $1.8 billion at average exchange rates for the year.