Russian retailer X5 Retail Group has agreed to buy 100% of the business and assets of OOO Agrotorg-Rostov, a Pyaterochka franchisee in the Rostov region, for RUB400m (US$15m).
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In an announcement on Monday (29 December), the Russian retail company said that the transaction would strengthen its presence in the south of Russia, building on X5’s multi-format strategy.
X5 will take control of 15 Pyaterochka soft discount stores. Ten of the outlets are on property owned by the company and X5 said it would consider selling real estate to raise funds in the future.
“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,” Lev Khasis, X5 CEO, revealed.
The deal will see X5 refinance RUB282m of Agrotorg-Rostov debt with B.I.N. Bank. The sum will be repaid in one-and-a-half years.
“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 is acting as a source of strength in Russian retail, ensuring that stores continue to operate and stabilising payments to suppliers to maintain the flow of deliveries to the consumer,” Khasis added.
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