MOSCOW (Reuters) – Russian grocery chain Magnit has made a $1.78 billion bid approach to smaller competitor Lenta, topping a rival offer from Russian steel magnate Alexey Mordashov.

Lenta said on Friday it had received an indicative, non-binding proposal from Magnit to buy 100 percent of the company for $3.65 per global depository receipt (GDR).

On Tuesday, Lenta said Mordashov had agreed to buy a 42 percent stake, to be followed by a cash offer for all the group’s outstanding shares, for $3.60 per GDR.

Magnit confirmed it was interested in buying Lenta and that it had made a proposal to buy 100 percent of its shares.

Mordashov’s Severgroup company declined to comment.

Lenta’s London-listed GDRs were up 1.4 percent at $3.59 in early trading.

Mordashov’s deal to buy the 42 percent stake from U.S. private equity fund TPG and the European Bank for Reconstruction and Development (EBRD) is binding and expected to be completed by the end of May, subject to approval by Russia’s anti-monopoly regulator, Lenta said earlier this week.

Lenta said on Friday its independent directors had asked Magnit to confirm it wanted to pursue a deal in light of Mordashov’s planned stake purchase and, if so, to provide details about timing and any conditions.

Magnit has not yet provided those details, Lenta said.

Lenta, the third-largest grocery retailer in Russia with a 3.2 percent market share and the largest hypermarket operator, could benefit from cooperating with Utkonos, the largest online grocery retailer in Russia, which Mordashov owns.

Prosperity Capital Management, which owns about 7 percent in Lenta, believes the price offered by Mordashov undervalues Lenta.

Alexey Krivoshapko, a portfolio manager and retail analyst at Prosperity which also owns stakes in Magnit and rival X5, said he hoped Magnit would make a formal bid for Lenta. He said a deal could achieve substantial synergies.

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