Intersport operations in Russia to be transferred to Kesko
Kesko has signed agreements on the transfer of the INTERSPORT licence in Russia to Kesko with Intersport International and the current licence holder Intersport CIS. According to the letter of intent signed at the same connection, Kesko will establish a new company for INTERSPORT operations in Russia together with Melovest, the owner of the current licence holder Intersport CIS. Melovest will become a shareholder of the new company with an ownership of 20%.
According to the key terms and conditions of the arrangement, the joint venture will acquire 36 stores mainly in the St. Petersburg and Moscow areas from companies currently engaged in INTERSPORT operations. In the future, the aim is to vigorously expand the INTERSPORT store network. The purchase price paid for the financial assets and support functions to be transferred in the arrangement will be determined on the basis of the reviewed value at the time of transfer.
"INTERSPORT is one of the best-known brands in the world in sports retailing, and the chain has achieved a strong position in the European market. INTERSPORT is a clear market leader in Finland and the INTERSPORT brand has good growth potential in Russia," says Matti Leminen, Senior Vice President, home and speciality goods trade.
“As shareholder and INTERSPORT Licensee for Finland, Kesko is a very professional and reliable partner for IIC, the suppliers and all other stakeholders. INTERSPORT’s high market share and the successful launch of Budget Sport are proof of an impressive track record on the Finnish market. Kesko’s respective know how, market power and financial strengths combined with the closeness of the current INTERSPORT organisation to the Russian market and their consumers are an ideal strategic fit and can be considered as a win-win situation for all parties involved. With this joint venture, INTERSPORT will sustainably grow within the Russian market and play a major role as an authentic, expert authority, multi-sport retailer,“ says Franz Julen, CEO IIC-INTERSPORT International Corporation.
The plan is to carry out the business arrangement by the end of this year. The implementation is subject to a final agreement on all the terms and conditions of the arrangement, approval by Russian competition authorities and the fulfilment of other implementation terms and conditions related to the transfer of financial assets. The arrangement is not expected to have a material impact on Kesko's sales, performance or financial position during the next 12 months.
ICC-Intersport International Company GmbH is an international sports retail marketing chain which consists of national companies and was established in 1968. The headquarters are located in Bern, Switzerland. There are more than 5,300 INTERSPORT stores in 39 countries and the retail sales totalled €10.2 billion in 2010. Kesko has been a shareholder of the company since 1992. There are 56 INTERSPORT stores in Finland, and Intersport Finland Ltd is the market leader in sports retailing.
In its stock exchange release of 4 April 2011, Kesko said that it will vigorously increase its operations in Russia. Kesko Food will expand its operations by constructing new stores. The capital expenditure is estimated at €300 million in 2011-2015. At the same time with greenfielding, Kesko Food will continue to explore business acquisition opportunities in both St. Petersburg and Moscow.
Rautakesko has currently 13 K-rauta stores in Russia, ten of which are located in St. Petersburg and three in nearby areas of Moscow. There are two K-rauta stores under construction, which will be opened in Moscow in late 2011. The plan is to open ten more new K-rauta stores in 2012-2015. The capital expenditure will be some €300 million.