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Russian oligarch buys out ailing Spanish supermarket chain Día

Russian oligarch buys out ailing Spanish supermarket chain Día

Mikhail Fridman, a Russian tycoon, bought the Spanish supermarket chain Dia, The Local Spain reported on Friday.

Dia faced pressure on its margins from rivals German discount chain Lidl and Spain’s Mercadona, with a tactic of offering super sales on a handful of items to lure in clients backfiring when stocks would quickly sell out leaving many customers frustrated. Mikhail Fridman’s investment fund has secured majority control of struggling Spanish discount supermarket chain Día via a public share offer.

In fact, 2018 year was rather bad for Dia, it lost 353 million euros, so, the Russian tycoon’s investment fund offer as attractive. The buyout price of 0.67 euros per share represented major losses for long-term investors as Dia shares were trading at above 4.00 euros until the beginning of last year.

Squeezed by tough competition from domestic and foreign rivals who have invested heavily in their stores, DIA has failed to stem a haemorrhage of market share it built up by discounting during a prolonged recession. On Tuesday, Dia reported a first quarter loss as sales fell.

Mikhail Fridman got a new business in Spain, again

According to the Luxembourg-based LetterOne, it was already the largest shareholder with a 29 percent stake in Día before the offer, which closed Monday, that brought it an additional 29.4 percent of ownership in the chain which operates supermarkets in Brazil, Argentina and Portugal in addition to Spain. The Latin American part of Dia’s business is steadily hurting performance.

Mikhail fridman’s investment fund is the last hope for Dia’s reviving, the experts say. What kind of a strategy the Russian oligarch would prefer for its new business in Spain, is not clear so far.

LetterOne had reached agreement with 16 out of 17 of Dia’s creditors on a viable capital structure for Dia, which has around 1.5 billion euros in debt. Dia urgently needed a financial support, the preliminary negotiations with LetterOne have revived Dia’s hope to receive additional 500 million euros.