X5 RETAIL GROUP N.V. starts DUE DILIGENCE on KARUSEL advised by GOLDMAN SACHS
16 Jan 2008
Amsterdam, 16 January 2008 - X5 Retail Group N.V., Russia's largest food retailer in terms of sales (LSE ticker: “FIVE”), announced today that it has sent an Option Notice (the Notice) to the shareholders of Formata Holding B.V. (Formata) on execution of its rights under a Call Option Agreement with respect to the purchase of 100% of the shares of Formata (the Option Shares). Formata owns the Karusel hypermarket chain. The Notice is irrevocable. Nevertheless, the acquisition of the Option Shares is conditional upon the completion by X5 Retail Group to its satisfaction of due diligence on Formata and on receipt by X5 Retail Group of any required regulatory, shareholder or third party approvals.
Following receipt of the Notice by Formata’s shareholders, X5 Retail Group has begun carrying out due diligence on Formata’s legal, tax, financial, business, real estate standing, etc. Under the Call Option Agreement, Formata must provide all reasonable assistance to X5 Retail Group in conducting the due diligence.
Completion of the Call Option, assuming the above conditions are fulfilled, must take place by the later of (i) 1 July 2008 or (ii) three months after the provision to X5 Retail Group of the audited consolidated IFRS accounts for Formata for the year ended 31 December 2007.
The amount payable by X5 Retail Group for the exercise of the Call Option is the aggregate of:
(a) the lesser of:
(i) 1.1 multiplied by consolidated net sales of Formata; or
(ii) 14.5 multiplied by the greater of
i. EBITDA; or
ii. 5% of consolidated net sales of Formata; plus
(b) the value of the land and other real estate in the course of construction (where business is not carried out as at 31 December 2007), as determined by an independent real estate valuer; less
(c) the aggregate amount of Formata’s net debt,
in each case calculated by reference to Formata's audited consolidated IFRS accounts for the year ended 31 December 2007.
No less than 75% of the Option Price is payable in cash, while the remaining amount can be settled by newly issued X5 Retail Group shares. The financing structure of the deal will be announced subject to X5’s satisfaction with the due diligence results.
X5 Retail Group has mandated Goldman Sachs to act as its financial advisor on the potential acquisition of Formata.
Note to Editors:
X5 Retail Group N.V. is Russia's largest food retailer in terms of sales. The Company was created as a result of a merger between Pyaterochka (soft discounter chain) and Perekrestok (supermarket chain) on 18 May 2006.
As of 30 September 2007, the Group had 573 company-managed soft discount stores located in Moscow (256), St. Petersburg (234) and other Russian areas (83), 163 company managed supermarkets across Central Russia and Ukraine, including 101 stores in Moscow (Moscow region and Yaroslavl region), and 13 company managed hypermarkets.
As of 30 September 2007, X5’s franchisees operated 627 stores across Russia and Kazakhstan.
The Group’s net sales for the first nine months 2007 reached USD 3,618 million, an increase of 50% year-on-year. Gross profit for the period totaled USD 946 million, EBITDA amounted to USD 311 million.
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