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Russian Post can support online delivery of goods from Magnit stores in 254 cities

The Russian Post, VTB and Magnit signed a memorandum on strategic partnership earlier today

SOCHI, February 16. /TASS/. The Russian Post can support online delivery of foods from stores of Magnit retailer in 254 Russian cities within the framework of the agreement with Magnit and VTB, Chief Executive Officer of the postal authority Nikolai Podguzov told TASS in an interview at the Russian Investment Forum on Friday.

"The online food retail is booming now. This is a topic related to delivery of foods. The Russian Post has 260 courier units in 254 cities. We can support a significant growth in online sales of the Magnit chain with the help of our courier service," the top manager said.

The Russian Post, VTB and Magnit signed a memorandum on strategic partnership earlier today, providing for joint development of a new retail format concept for combined provision of offline trade, post, logistical and banking services. The Russian Post and Magnit plan to consider an option of developing a joint service for goods delivery to customers via the courier service of the Russian post.

The Russian Post is also discussing cooperation with other major retailers, Podguzov said.

"We hold negotiations with many chains; this is fairly natural," he said. "I think agreements on cooperation with other companies are quite probable later on," Podguzov added without naming such companies.

The Russian Post is currently working on the complete upgrade of its logistical infrastructure and plans to complete it in 2-3 years. "This will make possible for us to achieve a fundamentally different quality of logistical services provision. Having achieved such quality, we will be able to become a logistic partner for any online retailer," Podguzov added.

VTB-Magnit deal 

VTB signed an agreement with Magnit on the acquisition of a 29.1% stake in the retailer, President and Chairman of the Management Board of VTB Bank Andrey Kostin said on Friday at the Russian Investment Forum in Sochi.

"We have signed an agreement to purchase a 29.1% stake in the retailer Magnit - thus, VTB becomes the largest shareholder of Magnit. Sergey Galitsky still has a stake of around 3% and remains a minority shareholder. The deal amounts to around 138 bln rubles ($2.45 bln) - perhaps one of the largest deals, at least this year, in mergers and acquisitions. To complete the deal, it will be necessary to get approval from the Federal Antimonopoly Service of Russia, but we do not see any problems with approval," Kostin said at the signing.

The new management of Magnit will be appointed in the near future; the company will be headed by Chief Financial Officer of the retailer Khachatur Pombukhchan. According to Kostin, changes in the leadership will happen in the "near future."

Kostin said he does not rule out the possibility of further expansion of the retailer Magnit. "The company is very promising, but has lost a lot in capitalization over the past year. We believe that we can return its share price to a higher level. We also look at the possibility of a merger, expansion and organic growth of the company," he said.

Kostin noted that this is a long-term investment, but in the future the asset can be sold.

According to Magnit press release, the retailer and VTB intend to maintain the dividend policy of the company after the bank becomes its largest shareholder.

Sergey Galitsky, former co-owner of Magnit and the founder of the company told TASS that after the sale of Magnit shares he intends to focus on the football club Krasnodar and the development of children's and youth football. "I will stay in the football club Krasnodar. I will focus on the club and children's and youth football," Galitsky said.

VTB does not plan to change the name of Magnit stores, however, the retail chain will be restyled, First Deputy President and Chairman of VTB Bank Management Board Yuri Soloviev told reporters. "The name of the store will not change, there will be restyling, an update. The program was launched last year, we are going to speed it up a little," he added.

According to Kostin, VTB, in particular, intends to work to increase the retailer's capitalization, which has recently halved.