Russian takeover for ailing Spanish Dia chain?

LetterOne, a Russian investor owned by Mikhail Fridman, plans a 300 million euro takeover bid on the ailing Spanish discount chain Dia.

Long-term plan

LetterOne already has a 30 % stake in the company today. With his bid, Fridman wants to counter a planned share issue worth 600 million euros. That plan was approved by Dia’s management in December, but it would force Letter1 to invest an additional 200 million euros just to maintain its current interest.

The offer could be very attractive to the other shareholders: his managing partner Stephan DuCharme told Reuters “We have a long-term plan. We are aware the next three to five years are not going to be easy and we are not looking to receive dividends overnight.” However, the offer is conditional and can only continue if the planned share issue is cancelled.

Dia is losing market share in Spain, where consumers turn their backs on the discounter now that the economy is picking up again. The company is in restructuring and urgently needs cash, but its shares plummeted last year after various profit warnings and reports about high debts. Until 2011 the chain was owned by Carrefour, after which it was brought to the Spanish stock exchange.