RUSSIA: X5 inks Paterson acquisition
X5 Retail Group, Russia's largest retailer by sales, has reached a deal to acquire local supermarket chain Paterson in a deal worth almost US$284m.
X5 has agreed to Paterson from CorpInvest for $198.5m in cash and the assumption of Paterson's debt, which stands at $85m.
The agreement will see X5 take ownership of Paterson's 82 supermarkets in and around Moscow, St Petersburg, Kazan and other cities in European Russia and the Urals.
X5 said that the deal will strengthen its presence in key geographic regions and increase its store count by approximately 25%.
"The acquisition reinforces X5's number one position in supermarkets and adds high quality locations in key geographic markets with strong demographics for this format," CEO Lev Khasis said.
"We see substantial scope for raising sales density and profit margins of the acquired stores by rebranding and realigning the value proposition and leveraging X5's operational scale, distribution infrastructure and efficiency programs."
X5 said that the deal would be financed through its operating cash flows.
The acquisition received approval from Russia's competition authorities at the end of October and is expected to close by mid-December.
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