Russian retailer Lenta will issue new shares worth around 25.6 billion roubles ($349 million), it said on Thursday, as it plans to buy online peer Utkonos in an expansion push focused on internet users. This year, the retail market saw one of its biggest consolidations in years when both Lenta and its rival Magnit (MGNT.MM) snapped up the Billa and Dixy chains, respectively, amid a fight for clients that intensified during the COVID-19 pandemic. On Thursday, Lenta said it would issue new shares worth about 25.643 billion roubles in a closed subscription, with the share price set at 1,087 roubles apiece, as part of the deal to buy Utkonos from Severgroup. Severgroup, which currently owns both Lenta and Utkonos, will buy Lenta shares worth 20 billion roubles and have preemptive rights, along with other shareholders, to exercise excess purchases. Lenta"s Moscow-listed depositary receipts (LNTADR.MM) leapt 8% on the announcement. At 1114 GMT they were up 5.9%. Lenta, whose purchase of competitor Billa Russia this year expanded its presence in Moscow, said the Utkonos deal would expand its online market share and give it a stronger foothold in the key Moscow market. Utkonos" revenue jumped around 66% year-on-year in 2020 to 14.3 billion roubles. The new combined online business will be named Lenta-U and will be run by Utkonos CEO Danny Perekalsky. Its combined market share across Russia would be around 8-10% in the online space in terms of revenue, Lenta"s Chief Financial Officer Rud Pedersen told reporters. The share offering was designed specially for the Utkonos deal and is separate from Lenta"s long-held plans to hold a secondary public offering (SPO), Pedersen added. "The possibility for an SPO still remains if it fits into other opportunities that may arise in the future," he said. All proceeds from the new share issue above the 20 billion roubles committed by Severgroup would be used for further supporting Lenta"s growth strategy, including its Mini Lenta store format, Pedersen added. ($1 = 73.4580 roubles) Reporting by Alexander Marrow and Olga Popova; Editing by Katya Golubkova, Elaine Hardcastle Our Standards: The Thomson Reuters Trust Principles.