MOSCOW (Reuters) - Russian home appliances retailer M.video has no plans to propose dividends for shareholders until 2020, President Alexander Tynkovan said, as a planned acquisition of MediaMarkt stores pushed back the resumption of payouts.
M.video’s main shareholder, Safmar, has agreed to buy German consumer electronics group Ceconomy’s Russian business MediaMarkt in a cash-and-share deal and will subsequently sell it on to M.video for $170 million.
“We see promise in the ... efficient expansion through the acquisition of MediaMarkt. Reinvesting dividends will bring quite significant benefits to the shareholders in the future,” Tynkovan told Reuters.
He said M.video would in May-June 2020 propose paying dividends on 2019 results and that management would recommend that no payouts be made in 2019 in respect of 2018 results.
In March, Tynkovan said the company could “return to the question of paying dividends” in a year and a half after fully completing its merger with Eldorado, due by the end of Q1 2019.
M.video last paid dividends in 2016, in respect of 2015 results. It paid no dividends in 2017 when it launched a share buyback and recommended in May that no dividends be paid in 2018 after acquiring rival chain Eldorado.
The company will use its own funds and debt to finance the acquisition of MediaMarkt from Safmar, which is controlled by the family of oil-to-real estate tycoon Mikhail Gutseriyev.
The company expects that as a result of the deal it will have annual turnover of 475 billion roubles ($7.5 billion) and earnings before interest, taxes, depreciation and amortisation of 33 billion roubles in 2022, Tynkovan said.
Its market share is expected to rise to 29 percent from the 26 percent the company currently has together with Eldorado - a rival retailer M.video bought in March.
In 2017, the two companies had combined sales of 304 billion roubles and Tynkovan said that sales were up 15 percent in the first quarter year-on-year to 91 billion roubles.
Ceconomy will get a 15-percent stake in M.video as a result of the deal with Safmar, while Safmar’s stake will decrease to 42.7 percent from 57.7 percent, and the free float will remain at 42.3 percent.
($1 = 63.5925 roubles)
Writing by Maria Kiselyova; Editing by Elaine Hardcastle