Shareholders in Spain's DIA backed a rescue plan for the faltering supermarket chain on Wednesday, in a vote that clears the way for Russian tycoon Mikhail Fridman's investment fund to proceed with a takeover bid.
A familiar sight on Spanish high streets, DIA has failed to lure back consumers who turned their backs on its no-frills model, as the Eurozone's fourth-largest economy pulled out of recession.
Fridman's LetterOne (L1), DIA's biggest shareholder, with a 29% stake, proposes raising €500 million in fresh capital. The fund's plan won over shareholders, who rejected a rival plan put forward by DIA's board.
Liquidity Injection
The board's plan had been part of a deal with creditors, struck in December – after three profit warnings in 12 months – to raise capital by €600 million in return for a sorely needed liquidity injection.
Faced with a hefty payout to maintain its stake, L1 launched a takeover bid contingent on shareholders blocking that deal and backing its own capital hike, which it plans to carry out after taking control of the company.
L1's bid values DIA at just over €410 million.
The group's shares, which fell by 90% in 2018, rose after the vote to post a 3.8% gain on the day, but remained €0.03 below LetterOne's €0.67 offer price.
DIA needs to rebalance its negative equity position to avoid the threat of insolvency, after booking heavy losses in 2017 and 2018.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
