October 16, 2018 / 8:52 AM / 9 months ago

Stockmann to exit Russia after lengthy search for buyer, shares rise

HELSINKI, Oct 16 (Reuters) - Finnish retailer Stockmann has sold its remaining Russian shopping centre, it said on Tuesday, following a two-year search for a buyer, propelling the company’s shares higher.

Known for its prestigious department stores, Helsinki-listed Stockmann has struggled in recent years due to a consumer shift to online shopping, prompting cost cuts and divestments.

Stockmann will sell its Nevsky Centre in St. Petersburg to Dutch PPF Real Estate for 171 million euros ($198 million), below the 181 million euro valuation ascribed to it in the Finnish company’s balance sheet.

The sale at below book value was no surprise given the lengthy search for a buyer, analysts at OP Bank wrote in a note to clients.

Stockmann’s shares rose more than seven percent in early trade, and were up 2.8 percent on the day at 0828 GMT, trading at 3.70 euros and outperforming a 1.2 percent rise in the Helsinki benchmark index.

The deal is still pending an approval from the Russian Federal Antimonopoly Service, and its completion would mean a definitive exit from the Russian market for Stockmann.

The company said the sale would have a positive cash flow effect of approximately 139 million euros.

“The divestment enables Stockmann to fully focus on developing its department store properties in Finland and the Baltic countries,” Chief Executive Lauri Veijalainen said in a statement.

$1 = 0.8627 euros Reporting by Anne Kauranen, editing by Terje Solsvik and David Evans

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