Luna in Purchase of Controlling Interest in Lenta
September 23, 2011
Cleary Gottlieb represented Luna, the joint investment vehicle of TPG and VTB Capital, in a transaction whereby shareholders of Lenta led by Svoboda Corporation sold a 44% holding to Luna, the European Bank of Reconstruction and Development, VTB Capital and a Cyprus subsidiary of Lenta for $1.14 billion. As a result, Luna will have a controlling interest in Lenta, Russia's leading grocery/hypermarket chain with 40 stores across the country. The deal marks the largest PE investment in a Russian business to date; it closed on September 23, 2011.
Cleary Gottlieb advised Luna on its initial investment in Lenta in October 2009, in which it acquired a 35% stake from the founder of the business. Following a disputed board meeting in May 2010 which resulted in rival claims as to who should serve as the CEO of Lenta, the firm represented Luna in an arbitration case before the LCIA and, working with local counsel, oversaw litigation in the British Virgin Islands as well as multiple court cases in the Russian Federation. In connection with the transaction, all litigation was settled. In addition, Cleary Gottlieb acted as counsel to Lenta in secured financing extended by VTB Capital, used in part to fund the purchase of Lenta shares by its Cyprus subsidiary, in one of the largest LBOs to date in Russia.