Following the announcement from 25th July 2019 Sberbank and Mail.ru Group (MAIL) today announce the signing of the final definitive documents for the creation of the leading Russian O2O (online-to-offline) services platform primarily focused on food and transportation. All relevant corporate governance approvals have been received, binding documents have been signed and parties are waiting for anti-monopoly approvals. The partners will hold equal stakes in the O2O JV with up to 10% of the company's shares to be allocated for an equity incentive pool for O2O employees. Closing of the transaction is anticipated before year-end.
O2O deal terms:
- Sberbank and Mail.ru Group plan to invest up to RUB 64.6 bln in the JV on the condition that key performance indicators are achieved by November 2020.
- Mail.ru Group will contribute to the new company its stakes in Delivery Club (100%) and Citymobil (29.67%) as well investments it holds in other firms operating in food-tech and mobility industries (including YouDrive, DC Daily, Performance Group), as well as RUB 8.5 bln. An additional investment of approximately RUB 4.6 bln may be added to the capital of the JV depending on the achievement of a number of KPIs by contributed assets by November 2020.
- Mail.ru Group will ensure that a 78.82% stake in Citymobil is accumulated ahead of deal closing, which does not mean additional capital commitment to the JV.
- Sberbank will contribute its 35% share in Foodplex, as well as approximately RUB 38.5 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 by November 2020.
- This means that the JV will receive approximately RUB 47 bln in capital at the conclusion of the deal and an additional investment of up to RUB 17.6 bln after closing if KPIs are achieved. In such case the post money valuation of the JV will exceed RUB 100 bln.
- After third anniversary of closing Sberbank has the right to put on voting of the corporate governance of MRG an exchange of Sberbank’s share in the JV into Mail.ru Group shares on the basis of fair value and limited to 20% of all the shares of Mail.ru Group. Absent the requisite approval by the board of directors and shareholders of Mail.ru Group, such conversion has a non-binding effect on Mail.ru Group.
- 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 food-tech and mobility segments that are complementary to the existing O2O businesses. Partners estimate that provided investments will be sufficient for realizing current business plans of O2O and it reaching break-even.
- In the future, the parties will consider the possibility of bringing in additional investors to facilitate the further development of the platform.
Partners also announce today a strategic cooperation. The parties plan to leverage their expertise in digital transformation to boost the development of digital economy and AI powered products in Russia. Mail.ru Group and Sberbank are among the leading ecosystems in Russia, and strategic cooperation can accelerate development and unlock significant further growth prospects. Our existing and potential future projects can benefit our companies and promote the development of digitalization and artificial intelligence in Russia.
The ecosystems of Mail.ru Group and Sberbank complement one another and offer significant potential synergies. Potential development areas include, but are not limited to:
1) Advertising products for small and medium-sized enterprises
2) Unique joint propositions for Mail.ru Group and Sberbank clients and users
3) Sharing of technological development expertise and new complex solutions
4) Joint strategic projects to boost parties’ further development
We have also been notified that Sberbank has now signed a binding agreement to acquire a 35% stake in MF Tekhnologii (MFT) from Gazprombank and 1% from Rostec, with a RUB11.3 bln deal value. Deal is expected to close before year-end. No changes in management, governance or strategy of Mail.ru Group are expected as a result of the given transaction.
Boris Dobrodeev, CEO of Mail.ru Group:
“Our collaboration with Sberbank within our existing partnership has been productive: it has proved that we share the same vision of the market, and that Sberbank supports our strategy. We are pleased with the prospect of expanding our cooperation: the ecosystems of Sberbank and Mail.ru Group complement each other, and together we will be able to develop O2O products, and provide a wider range of services and offers to our users and clients. We believe that our partnership will drive growth of our companies and the market”.
Herman Gref, CEO and Chairman of the Executive Board of Sberbank:
“The agreements we’ve signed with Mail.ru Group usher in our joint projects, as well as the beginning of a closer cooperation, in which we’ll be able to bring together our technological and intellectual resources along the way. We believe that our partnership will significantly enhance digital economy in Russia, result in the active development of advanced and popular services that will change the common patterns for consumption of products and services.”
Phone: +7 495 725 6357 extension: 3434
Mobile: +7 905 594 6604
Mobile: +7 (925) 347-83-81