Moscow, Oct 2 - X5 Retail Group, Russia's largest food retailer by revenue, on Friday applied for regulatory approval to buy local supermarket chain Paterson, an official at the Federal Anti-monopoly Service (FAS) said.
The official said X5 sought permission to buy into Paterson -- a 80-store chain with 2008 revenues of 14 billion roubles ($465.7 million), under Russian Accounting Standards.
He did not specify what stake X5 sought to acquire. The shares of X5 traded 3 percent down at 1158 GMT, slightly improving performance from early trading hours.
"X5 always looks at M&A opportunities as part of the long term consolidation of the retail sector. The company from time to time conducts preliminary discussions with many companies. Paterson is one example," X5 Chief Executive Lev Khasis said in emailed comments to Reuters.
Two banking sources and a source close to Paterson said X5 has been in talks to acquire Paterson since the beginning of 2009 and is currently discussing with its owners a part cash, part equity deal.
One banking source said the sides had signed a memorandum of understanding, but it was too early to talk about the deal.
X5 confirmed it had submitted the request with the regulator, but refused to comment on what it said were "preliminary negotiations."
"Submission of an application to the anti-trust authorities is a purely technical step, required to determine whether there are any regulatory issues to proceeding with negotiations," Khasis said.
X5, part of billionaire Mikhail Fridman's empire Alfa Group, had sales about $9 billion in 2008.