Amsterdam, 12 May 2008 - X5 Retail Group N.V. (“X5” or the “Company”), Russia's largest food retailer in terms of sales (LSE ticker: “FIVE”), announces that it has received approval from the Federal Anti-Monopoly Service (the “FAS”) to acquire the Karusel hypermarket chain (“Karusel”).
The acquisition, which is still subject to satisfactory completion of due diligence, will substantially increase X5’s market share in the food retail market of St. Petersburg. The FAS approval contains a number of conditions regarding the conduct by X5 of its business in St. Petersburg intended to promote competition and ensure fair terms for participants in the
St. Petersburg food retail market.
These conditions include fair, transparent and non-discriminatory dealings with suppliers to X5's stores in St. Petersburg, the development, approval by the FAS and publication on X5's website of rules relating to its dealings with suppliers in St. Petersburg, and compliance with these rules.Detailed provisions of the approval will prohibit, among other things, charges by X5 to suppliers of unprocessed agricultural products* to X5 stores in St. Petersburg and the establishment of terms relating to compensation by such suppliers of X5’s expenses.The conditions to the approval also regulate similar arrangements X5 may have with suppliers of other products to its stores in St. Petersburg.The approval does not require X5 to dispose of any part of its or Karusel's business.X5 does not expect to be materially affected by these conditions.
Commenting on today’s announcement, Lev Khasis, Chief Executive Officer of X5 Retail Group N.V., said:
“We are happy to announce that the Anti-Monopoly Service approved the acquisition of Karusel by X5.We also welcome the FAS’ efforts to establish transparent rules for the players in the St. Petersburg food retail market and to promote fair and non-discriminatory relations between retailers and suppliers, which is in line with the Company’s business approach.We believe that the measures proposed by the FAS are ultimately in the interest of consumers, and, in line with the new rules, the Company intends to continue improving its relationships with suppliers with the aim of sharing the obtained benefits with its customers”.
Andrei Gusev, Mergers, Acquisitions and Business Development Director of X5 Retail Group added:
“X5 has fulfilled its obligations under the Call Option Agreement:the Company raised funding to acquire Karusel and obtained the approval by the Anti-Monopoly Service. We plan to finalize the due diligence shortly and subject to our satisfaction with the results are determined to proceed to closing of the acquisition”.
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 31 March 2008, the Group had 731Company managed soft discount stores located in Moscow (321), St. Petersburg (249) and other Russian areas (161), 183 Company managed supermarkets across Central Russia and Ukraine, including 108 stores in Moscow (Moscow region and Yaroslavl region), and 16 Company managed hypermarkets. As of 31 March 2008, X5’s franchisees operated 711 stores across Russia and Kazakhstan. In accordance with preliminary unaudited data, the Group’s net sales for the full year 2007 reached USD 5,320 mln, an increase of 53% year-on-year.Gross profit for the period totaled USD 1,404 mln, EBITDA amounted to USD 479 mln.Full year 2007 net income reached USD 141 mln. X5 Retail Group N.V.’s net retail sales for the first quarter2008surged61% in USD terms and reached USD 1,775 mln.
* Products that have not been subject to thermal treatment, except for non-refrigerated cooling