Russian grocery retailer Pyaterochka Holding NV, today (Monday) announced its intention to acquire its franchise operator in the Southern Urals region of Russia, as the first step in its strategy of consolidation of its franchise operations.

Pyaterochka's operating subsidiary Agrotorg has agreed to purchase the franchise network of Economtorg, including 19 stores, a warehouse, a regional head office and a training centre. The net selling area acquired comprises 10,404 sq.m.

Agrotorg is expected to complete the transaction by the end of 2005, subject to final closing conditions, the company said. The value of the transaction is approximately US$11m, comprising a cash payment for 100% of Economtorg's shares and the value of the assumed debt.

Economtorg has been the operator of the Pyaterochka franchise in Yekaterinburg (Russia's fifth largest city) and the surrounding Sverdlovsk region. Its stores increased rapidly in number in 2004 from 5 to 17 and Pyaterochka intends to continue increasing store numbers, to 25 by the end of 2005 and 40 by the end of 2006.

Economtorg turnover was around $20m in 2004 under Russian accounting standards.