Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Khasis to Sell Off Control of TsUM

VedomostiThe Tsentralny Universalny Magazin
Lev Khasis, shareholder and board chairman of the TsUM department store, said he intends to sell his stake in the venerable trading house opposite the Bolshoi Theater to invest in the Perekryostok supermarket chain.

Khasis said he controls a 60 percent stake in TsUM through stakes owned by companies controlled by Khasis, other managers and the OLMA investment company, which is to act as the seller of the stake.

"There is a group of investors I am friendly with that used to control TsUM," Khasis said.

TsUM's new chairman is to be elected, and ownership rights to Khasis' stake are to be transferred before the end of the year, said OLMA general director Oleg Yanchik. OLMA will then most likely sell its stake in TsUM, he said.

Khasis said he would leave himself "a little stake, much smaller than a controlling share" in TsUM. The rest is to be handed over to OLMA, which intends to sell those shares to another investor, he said.

Khasis acquired a 15.5 percent stake in TsUM from AIG Brunswick a little more than a year ago. Soon after, he was made chairman of the board of directors and steadily increased his share in the company.

Both Khasis and Yanchik declined to comment on potential buyers of the stake. Brunswick Capital Management, which owns a 12 percent stake in TsUM, also would not comment.

Minority shareholders are expressing concern about the deal, said a source close to TsUM. "Khasis announced grandiose plans to develop TsUM, including the creation of a network of supermarkets in the regions," the source said. "Who is going to do that now?"

Khasis said he has changed his mind about building a TsUM store at the MEGA mall in the Moscow region.

"Instead, that money will be used to build a new TsUM building in the center of Moscow," he said.

United Financial Group analyst Alexei Krivoshapko said: "My explanation is that Khasis suddenly needed money, and that's why he has to sell his stake urgently."

Khasis, however, said he has decided to reinvest in the Perekryostok supermarket chain. Perekryostok is owned by its managers and Alfa Group.

Khasis was vice president of Alfa Bank before he joined TsUM a little more than a year ago. "In my opinion that business has a better future. What's so special about that?" he said.

Khasis said he holds a minority stake in Perekryostok and became its chairman three months ago. "I plan to increase my stake in Perekryostok by buying some shares from Alfa Group," he said.

According to UFG, TsUM sales in the first half of 2002 reached $17.9 million, up 6 percent compared to the same period last year. Its operational profit was $3 million -- up 18 percent -- and its gross income was up 15 percent at $6.7 million. Net profits were up 41 percent to $1.7 million.

TsUM's share price has almost doubled since Khakis joined the company and now is between $0.35 and $0.45. TsUM has a market capitalization of $37 million, according to UFG. Its 89.7 million shares are distributed between 11,500 shareholders.