Britain Dixons Group to buy Russia's largest household appliance network

A huge deal is being prepared on the Russian retail market. Eldorado Group, which controls Russia's largest network of household appliance stores, and Britain's Dixons Group have signed an option agreement under which Dixons may buy Eldorado for $1.9 billion by 2011, Kommersant reports.

Neither Dixons nor Eldorado have disclosed the scheme for buying the Russian group. "Market players do not know the Eldorado Group's structure and with whom exactly the option agreement was signed," says Marat Ibragimov, an analyst with the Uralsib financial group. "It was most likely signed with an offshore company that controls the group's companies."

Experts believe the declared price of the deal, almost $2 billion, will become a strong incentive for Eldorado to develop, because the company is worth far less now.

Analysts note that the Dixons-Eldorado deal may mark a new stage in Russia's relations with foreign investors. The gaze of Western companies is now fixed on consumer market players, not commodity giants. The change of investors' priorities is logical: the political risks are not high in the retail trade and getting a license to buy from the authorities is not as difficult as in other sectors.

Eldorado Group is Russia's largest trade network specializing in household appliances and consumer electronics. The company is also represented in Ukraine and has a store in Poland. The Eldorado network has 610 stores, including 290 franchises. Experts estimate the network's turnover reached $1.3 billion in 2004.