November 23, 2017 / 10:24 AM / 24 days ago

UPDATE 1-Russian retailer Dixy's board approves delisting, extends buyback

* Plans to delist after buying back 20 pct of shares

* Announces third round of share repurchase programme

* Biggest minority shareholder PCM opposing the move (Adds further details, comments by minority shareholder, analyst)

MOSCOW, Nov 23 (Reuters) - The board of Russian food retailer Dixy has decided to delist its shares from the Moscow Exchange, 10 years after it went public, the company said on Thursday, offering to buy out minority shareholders for 340 roubles a share.

Dixy has struggled against fierce competition from rivals such as Magnit and X5 as consumers hit by recession remain highly price-sensitive despite a broader recovery in the Russian economy.

Its third-quarter revenue dropped though 8.3 percent to 68.8 billion roubles.

The retailer, controlled by Igor Kesayev’s tobacco products distributor Mercury Group, said on Thursday it would pay 340 roubles ($5.82) a share to buy out those shareholders opposing the move and those abstaining from voting.

The shares were trading up 3.46 percent at 328.50 roubles by 0955 GMT.

Citi analysts said because the offer price is 26 percent above Dixy’s average share price over the last six months it “should overcome any remaining shareholder objections to the board’s decision.”

However, Prosperity Capital Management, Dixy’s biggest minority shareholder with a stake of more than 20 percent, plans to vote against the de-listing at a shareholder meeting on Dec. 25, Director Alexei Krivoshapko said on Thursday.

For the decision to pass, Dixy needs at least 75 percent of the votes.

After two rounds of share buybacks this year, less than 9 percent of Dixy’s shares have remained in free float, analysts at BCS investment bank said this week, adding that the buyback and delisting could be in preparation for a sale of the business.

Dixy also announced on Thursday a third round of its share buyback programme worth up to 2 billion roubles, having already spent 4.5 billion roubles buying in 20 percent from the market in a move which sparked speculation that the company planned to delist. ($1 = 58.3900 roubles) (Reporting by Anna Pruchnicka and Anna Rzhevkina in Gdynia and Maria Kiselyova in Moscow Editing by Greg Mahlich)

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