Russia's X5 Retail Group has agreed to buy 100 per cent of OOO Agrotorg-Rostov - a franchisee of the group's Pyaterochka chain in the Rostov region - for RUB 400 mln (EUR 10 mln). The sum includes refinancing of debt owed to B.I.N.BANK and trade accounts payable to suppliers and employees. 

The transaction will allow X5 to strengthen its geographic presence in the south of Russia with a better balanced multi-format store portfolio.

Lev Khasis, X5 Retail Group CEO, said, "We have always considered franchisee buy-outs as part of X5’s expansion strategy.  In current market conditions, we have increased our focus on these potential opportunities as a consequence of the liquidity situation many players are facing. 

"The buy-out of OOO Agrotorg-Rostov is the first transaction in an inevitable process of Russian retail consolidation and we are considering other potential buy-outs of franchisee businesses or assets.” 

X5 Retail Group plans to operate 15 of the Pyaterochka soft discount stores acquired in the transaction (about 7,000 m2 of net selling space), of which ten of them are owned properties. It will consider selling some real estate assets at a future date. 

X5 is Russia's largest retailer in terms of revenue, reporting a profit of EUR 102 million for the first nine months for 2008. At the same time, it reported a net loss of EUR 10.8 million for the third quarter and forecast a slowdown in sales growth to around 25 per cent from the 40 per cent seen in 2008. It also declared it would cut its investment budget for 2009 from around EUR 750 million to EUR375 million.

Speaking to Russia Today recently, Khassis, said, "The year has been not bad at all, we hope to reach all the figures we planned despite the crisis.”

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