X5 Retail Group N.V. gains control over 40 Pyaterochka stores in Chelyabinsk
10 Apr 2007
Amsterdam, 10 April 2007 - X5 Retail Group N.V., Russia's largest food retailer in terms of sales (LSE ticker: “FIVE”) , announced today that it signed an agreement with the owners of Pyaterochka franchises in Chelyabinsk to create a joint company which will merge all the Pyaterochka’s assets in Chelyabinsk and Yekaterinburg.
According to the terms of the agreement, X5 Retail Group controls 51 percent of the joint company and the owner of Pyaterochka franchises in Chelyabinsk receives 49 percent, which X5 Retail Group will purchase according to a pre-arranged two-step formula of 24 percent in 2008 and 25 percent in 2009.
For X5 Retail Group, the initial investment into the joint company consists of 26 % of Pyaterochka chain in Chelyabinsk and 100 % of Pyaterochka chain in Yekaterinburg. The owner of Pyaterochka franchises in Chelyabinsk invests 74 % of Pyaterochka chain in Chelyabinsk.
The transaction is subject to approval of Federal Antimonopoly Service (FAS).
“This deal which gives us control over 40 Pyaterochka stores in Cheliabinsk with total net selling space of 13,811 sq. m. , is be the first case of the Group’s buy-out of its franchise stores in line with the Company’s M&A strategy focusing inter alia on selective buy-out of certain franchises in strategically important Russian regions,” said Andrei Gusev, Group Director for Mergers, Acquisitions and Business Development. “The creation of an Urals cluster on the base of Chelyabinsk and Yekaterinburg stores allows us to successfully develop our chain in the Urals market which is not any smaller than the St. Petersburg market.”
Note to Editors:
X5 Retail Group N.V. is Russia's largest food retailer in terms of sales. As of 31 March 2007, the Group had 512 company-managed "Pyaterochka" soft discount stores located in the Moscow (232), St. Petersburg (215) and other Russian areas (65), and 169 company-managed "Perekrestok" supermarkets across Central Russia and Ukraine, including 99 stores in Moscow.
As of 31 March 2007, franchisees operated 533 Pyaterochka branded stores across Russia and Kazakhstan. Perekrestok had 10 stores operated by franchisees in the Moscow area.
Pyaterochka and Perekrestok have merged their operations as of 18 May 2006 to create the clear leader in the Russian food retail market.
The Group’s pro forma net sales for the FY 2006 were $3,485 million, up +47% vs. 2005 (preliminary management accounts). Pyaterochka chain provided US $1,973 million of net sales, while the Perekrestok chain contributed US $1,512 million of net sales.
Forward looking statements:
This announcement includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the fact that they do not only relate to historical or current events. Forward-looking statements often use words such as” anticipate”, “target”, “expect”, “estimate”, “intend”, “expected”, “plan”, “goal” believe”, or other words of similar meaning.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, a number of which are beyond X5 Retail Group N.V.'s control. As a result, actual future results may differ materially from the plans, goals and expectations set out in these forward-looking statements.
Any forward-looking statements made by or on behalf of X5 Retail Group N.V. speak only as at the date of this announcement. Save as required by any applicable laws or regulations, X5 Retail Group N.V. undertakes no obligation publicly to release the results of any revisions to any forward-looking statements in this document that may occur due to any change in its expectations or to reflect events or circumstances after the date of this document.
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