BGP Litigation managing director Alexey Nechaev speaks with about the prospects of a new major player appearing on the Russian home electronics market following Safmar group's acquisition of M.Video

"Alexey Nechaev, managing director at BGP Litigation, believes that the Gutseriev-Shishkhanov family's involvement in the project increases the chances that a single strategic player could emerge on the market. And the consumer will only benefit from such a development.

"It seems likely not only in view of the resources available to the Safmar group's owners, but also because a merger could be cost-effective both for the business itself and for the consumer. Economies of scale would mean the new structure has two important advantages. First, procurement prices could be influenced – something that smaller companies acting individually have not been able to do. Second, by cutting related expenses the company would be able to offer the very latest products at an attractive price point", said Nechaev.

He believes that a merger between the three chains M.Video, Eldorado and Technosila is highly likely. Such a consolidation would create the largest player on Russia's home electronics market, says the expert, and would solve a range of problems faced by the individual companies, with the strongest player's business model being replicated at the new structure. "It would also solve the problems currently faced by Technosila, which would have a positive impact on financial structures of the BIN group", added Nechaev.

Structures owned by the Gutseriev-Shishkhanov family, which have plenty of experience transforming businesses, are again expected to implement leading global practices and successfully adapt them to the Russian market. This is particularly important given electronics retailers' relatively low margins, notes Nechaev.

He does not rule out the possibility that after acquiring M.Video the Safmar group will continue its expansion. Taking into account the corporate conflict between the owners of Ulmart, the trend may well continue. "Safmar structures are interested in establishing a strategically significant market player that can ultimately launch an IPO", says Nechaev".

The full article (in Russian) is available here: "Игра в монополию".