Ukrainian tycoons are expanding their horizons: Epicenter plans to take over Intersport

Galina and Alexander Gerega are investing €10 million in Intersport Polska and plan to buy out the company’s shares. Forbes found out whether the Ukrainian “Epicenter” can really absorb the Polish Intersport.

The owners of Epicenter, Alexander and Galina Geregi, became interested in Polish Intersport. In mid-August, Galina Gerega submitted an application to the Polish Competition and Consumer Authority to acquire Intersport Polska. The Geregas should receive control over Intersport Polska SA through their subsidiaries Epicenter K LLC and Paravita Holding Limited.

“Epicenter” is in the process of finalizing a deal to acquire a stake in Intersport Polska, the retailer’s CEO Piotr Mikhailyshyn confirmed to Forbes. He added that he could not disclose details of the transaction until its final completion.

Retailer Intersport Polska has entered into an investment agreement with the Ukrainian Epicenter and its business partner Paravita Holding from Cyprus on joint investment in the chain in April 2023. The agreement provides for an investment of €10 million. These financial resources will be used to open new stores and modernize existing retail outlets, says Mikhailyshyn.

“Many clients from Ukraine live in Poland, and it would be logical for Epicenter to build a connection with them in this way,” Marek Kaczmarek, president of Intersport Polska, explained the rapprochement with Epicenter to the Polish publication Rzeczpospolita. Ukrainian investments are a way to improve both Epicenter and Intersport by joining forces to attract customers, consolidate purchases, and reduce costs and logistics risks, Kaczmarek believes.

Loss-making Intersport Polska

There are 35 multi-brand sporting goods stores operating under the Intersport banner in Poland. Things weren't going well for the retailer, who started looking for additional funding from a potential investor back in 2021. At the end of 2022, Intersport issued 55.3 million shares to raise an additional amount of 80 million zlotys, the company’s press service reported.

From April 2022 to March 2023, the company received an annual net loss of 12.8 million zlotys, and net income amounted to 239,457 zlotys, the company’s financial report stated. The reasons for the losses include the pandemic, supply shortages and interruptions in cooperation with key suppliers of goods.

As of August 23, one share of Intersport Polska costs 0.9 zlotys, the market value on the Warsaw Stock Exchange is 30.8 million zlotys.

Intersport place in “Epicenter” Gereg

The Swiss company Intersport International Corporation GMBH has been developing an international sports retail group since 1968. As of the beginning of 2023, it had 5,300 stores worldwide with a turnover of €13.7 billion and was represented in 42 countries, says the company’s official report.

In Ukraine, Epicenter K has been developing the Intersport network since 2015, when they signed a partnership agreement with the Swiss IIC-Intersport International Corporation GMBH. Since then, the Ukrainian network of multi-brand sporting goods stores has grown to more than 50 outlets in different regions of the country, becoming one of the leaders in the sportswear and equipment market, says Mikhailyshyn.

In addition to Intersport, Epicenter is developing its own networks, “Galleries Deko” and E.PIC, outside its shopping centers, as well as sports networks 4F (an agreement with the Polish company OTCF) and The Athlete's foot (a subsidiary project of Intersport).

Over the past year, Epicenter managed to open two large shopping centers: in Lviv (90,000 sq. m.) and Kyiv (30,000 sq. m.). Investments in them amounted to UAH 2.9 billion and UAH 1.8 billion, respectively, reported the acting director. director of retail trade at Epicenter Dmitry Tanko to the Interfax-Ukraine agency. As of August 2023, the retailer operates 74 shopping centers, including New Line hypermarkets.

Eight Epicenter shopping centers are currently not operating due to the occupation of territories, the proximity of hostilities, or complete destruction. According to the YouControl analytical system, the company’s revenue in 2022 increased by 0.6%, to UAH 57.6 billion, compared to the previous year.

The Gereg business empire, according to the Retailers Association, also includes a large agricultural business represented by the Epicenter Agro agricultural holding (160,000 hectares of land under cultivation, 14 elevators for 1.5 million tons), a ceramic tile plant in the town of Kalinovka, and the Carpathian Ceramics plant ”, the wood processing enterprise “Osmoloda”, as well as a number of logistics centers in different regions of the country.

In May 2021, Epicenter also bought the Dunaevetsky bakery for UAH 227 million. In September 2022, Oschadbank entered into new loan agreements with Epicenter K LLC for $50 million. The funds were planned to be used for the construction of grain storage elevators and auxiliary infrastructure, as well as for the construction and opening of shopping centers.

In December 2022, Forbes Ukraine estimated the fortune of Alexander and Galina Gereg at $1.2 billion. Before the full-scale war, in February 2022, the estimate of their fortune was $1.8 billion.