Sberbank (SBER)
Sberbank and Mail.ru Group to create a strategic partnership focusing on
major Russian consumer markets - transportation and food
25-Jul-2019 / 08:00 CET/CEST
Dissemination of a Regulatory Announcement that contains inside information
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Sberbank and Mail.ru Group to create a strategic partnership focusing on
major Russian consumer markets - transportation and food
? The companies are creating a joint O2O platform based on Delivery Club
and Citymobil, which may be valued at more than RUB 100 bln
? The joint venture (JV) will operate in markets worth more than RUB 1 tln
combined over the next three years
? The combination of services will allow a leading 'last mile' delivery
player to be created that has deep synergies with the ecosystems of
Sberbank and Mail.ru Group
25 July 2019, Moscow - Sberbank and Mail.ru Group plan to create a leading
Russian O2O (online-to-offline) services platform focused on the key areas
of food and transportation. The joint venture (JV) will operate in Russia's
two largest digital consumer markets that are expected to have a combined
value of more than RUB 1 tln over the next three years with an anticipated
CAGR of more than 30%. The partners will hold equal 50/50 stakes in the JV.
The partnership will allow the financial and technological resources of
Sberbank and Mail.ru Group to be combined and will create an optimal
environment for the development of O2O consumer services. The services
offered by the platform will be integrated into the ecosystems of Sberbank
and Mail.ru Group, and compliment the existing range of high-quality
services that meet consumers' everyday needs.
The parties have signed a letter of intent on the creation of the JV. The
legally binding agreement is planned to be signed in autumn 2019, after
approval is received from corporate governance bodies, anti-monopoly
authorities and other regulators.
The strategic partnership will:
? Build a leading O2O platform around Russia's two largest digital
consumer markets: food and transportation, which currently account for
more than half of household spending. These are fast-growing and
high-frequency consumer segments with high potential profitability.
? Broaden the geographic reach of Delivery Club.
? Accelerate the regional expansion of Citymobil and strengthen its
position in the Moscow market.
? Increase efficiency, quality of customer service, boost the capacity and
speed of order processing, and strengthen the technological foundation,
including through the artificial intelligence capabilities employed by the
services.
? Create a market leading business with the potential for an IPO in the
next few years.
Deal structure:
? Sberbank and Mail.ru Group plan to invest up to RUB 64 bln in the JV on
the condition that key performance indicators are achieved over the
12-month period following the closing of the transaction. .
? Mail.ru Group will contribute to the new company its stakes in Delivery
Club (100%) and Citymobil (22.69%), the related minority investment and
options it holds in other firms from these industries, as well as RUB 7.7
bln. An additional investment of up to RUB 5.1 bln may be added to the
capital of the JV depending on the achievement of a number of KPIs by
contributed assets over the 12-month period following the closing of the
transaction.
? Prior to deal closing, Mail.ru Group will ensure that a stake of no less
than 75% in Citymobil is accumulated by the JV.
? Sberbank will contribute its share in Foodplex (35%) and approximately
RUB 38 bln in cash to the JV. Sberbank's overall contribution may increase
by an additional RUB 13 bln if Delivery Club and Citymobil achieve a
number of KPIs over the next 12 months.
? This means that the JV will receive RUB 45.5 bln at the conclusion of
the deal, and an additional investment of up to RUB 18 bln over the
following 12-month period after closing if KPIs are achieved. If these
KPIs are achieved, the post money valuation of the JV will exceed RUB 100
bln.
? All financing will be invested in the JV in the form of cash-in and used
to drive organic development, consolidate assets and fund potential
transactions in the foodtech and mobility segments that are complementary
to the existing O2O businesses.
? In the future, the parties will consider the possibility of bringing in
additional investors to facilitate the further development of the
platform.
Herman Gref, CEO and Chairman of the Executive Board of Sberbank:
"Investing in this O2O platform is an important step in building Sberbank's
ecosystem. We are entering the largest and most dynamic markets in Russia to
offer our clients a brand new model for consuming services and to establish
a leading national last mile delivery player. Our future JV consists of
fast-growing companies that have impressive potential and strong management,
and are backed by the expertise of two of the country's largest ecosystems
and unprecedented client coverage."
Boris Dobrodeev, CEO of Mail.ru Group:
"Mail.ru Group will offer unparalleled opportunities for Russian users,
partner restaurants, taxi fleets and drivers. Thanks to this, we will
rapidly take Delivery Club and Citymobil to an entire new level. This is a
key step in building a business that will have a significant impact on
Russia's digital economy. Consumer habits are changing quickly, and together
with Sberbank we want to lead this transformation. The Russian online food
delivery and taxi services markets have considerable growth potential. We
are delighted to develop these markets and use their long-term potential
together with our partner. As one of Russia's leading ecosystems, Sberbank
adds significant value to the assets included in the deal."
# # #
Sberbank
Yulia Emm
Press Office
Tel. +7 495 957-57-21
media@sberbank.ru
Sberbank is Russia's largest bank and a leading global financial
institution. Sberbank holds almost one third of aggregate Russian banking
sector assets, it is the key lender to the national economy and the biggest
deposit taker in Russia. The Central Bank of the Russian Federation is the
founder and principal shareholder of Sberbank owning 50% of the Bank's
authorised capital plus one voting share, with the remaining 50% held by
domestic and international investors. Sberbank has more than 145 million
customers in 22 countries. Sberbank has the largest distribution network in
Russia with almost 15,000 branches, and its international operations include
UK, US, CIS, Central and Eastern Europe, India, China, Turkey and other
countries.
The Bank holds the general banking licence No. 1481 issued by the Bank of
Russia. Official websites of the Bank: www.sberbank.com [1] (Sberbank Group
website), www.sberbank.ru [2].
Mail.ru Group
Investors
Tatiana Volochkovich
Phone: +7 495 725 6357 extension: 3434
Mobile: +7 905 594 6604
E-mail: t.volochkovich@corp.mail.ru
Press
Sergei Luchin
Mobile: +7 (925) 347-83-81
E-mail: s.luchin@corp.mail.ru
Mail.ru Group (MAIL.LI, listed since November 5, 2010) is the largest
internet business in Russia in terms of total daily audience (Mediascope Web
Index Desktop+Mobile, Russia, population aged 12-64 in the cities 100,000+,
April 2019).
Mail.ru Group is developing the leading domestic internet communications and
entertainment platform. The company owns Russia's two largest Russian
language social networks, VKontakte (VK) and Odnoklassniki (OK), leading
email service, one of Russia's largest internet portals (Mail.ru), and three
instant messaging services. Mail.ru Group's gaming portfolio under MY.GAMES
brand includes Russia's largest MMO games and global mobile games. In 2019,
MRG Tech Lab was launched with a primary focus on technology and innovation
development.
ISIN: US80585Y3080, RU0009029540, RU0009029557, US80585Y4070
Category Code: JVE
TIDM: SBER
LEI Code: 549300WE6TAF5EEWQS81
OAM Categories: 2.2. Inside information
Sequence No.: 14591
EQS News ID: 846619
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(END) Dow Jones Newswires
July 25, 2019 02:00 ET (06:00 GMT)
