Russian tycoon Fridman wins control of Spanish retailer DIA after lengthy takeover bid

MADRID, May 17 (Reuters) - Russian tycoon Mikhail Fridman’s investment fund LetterOne said on Friday it has won control of loss-making Spanish retailer DIA, after a drawn out takeover bid.

LetterOne (L1) has sought since February to buy the roughly 70 percent of DIA that it did not own but was forced to lower the acceptance threshold for its bid twice after it failed to secure the backing of some DIA shareholders.

On Friday it said it now had a 58.36% stake in the retailer and that its takeover bid was accepted by shareholders owning 29.36% of DIA capital as of the market close on May 16.

L1 has said it is prepared to loan its own funds to rescue DIA, whose 1.7 billion euros in debt and negative equity position have put it at risk of having to declare insolvency.

Shares in DIA were up 3 percent at 0.6890 euros by 0757 GMT.

L1 made a bid on Feb. 5 to buy the rest of DIA for 0.67 euros per share.

In April LetterOne reduced the minimum acceptance level for its bid for DIA to 20 percent of shareholders from an original 35 percent target, and then scrapped the condition altogether on May 6.

Squeezed by tough competition from domestic and foreign rivals who have invested heavily in their stores, DIA has failed to stem a haemorrhage of market share it built up by discounting during a prolonged recession.

On Tuesday, DIA reported a first quarter loss as sales fell.

L1 said on Friday that it had reached an agreement in principle regarding a viable long-term capital structure with 16 of the 17 existing syndicated lenders of DIA, which represent 77.5% of the syndicated facilities.

Fridman’s investment fund said it was committed to subscribe its pro-rata share and to underwrite a capital increase of 500 million euros to achieve a viable long-term capital structure for DIA.

However, it said such a capital increase could only proceed if all of the company’s syndicated lenders agreed.

Reporting by Jesús Aguado; Editing by Susan Fenton