X5 Retail Group has reached an agreement with the former shareholders of Formata to resolve the outstanding post-completion issues on the recent acquisition.
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Following the Russian retail group’s acquisition of Formata, the owner of Karusel hypermarket chain, on 27 June the company announced outstanding issues including real estate development contracts between Formata and the affiliates of Donson and significant prepayments made under these contracts.
The agreement will involve the unwinding of the Donson contracts and the refund of all prepayments made to the value of around RUR3.9bn (US$160m) to Formata.
“This agreement in fact represents successful completion of two landmark M&A transactions in Russian retail – merger between Perekrestok and Pyaterochka and acquisition of Karusel by X5, which resulted in creation of a full-scale multi-format Russian retailer and an unrivalled leader in the sector,” said Lev Khasis, CEO of X5 Retail Group.
The former shareholders will be required to pay to X5 approximately US$40m representing their compliance with post-completion obligations under the call option agreement.
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By GlobalDataAndrei Rogachev, former owner of Formata and existing shareholder in X5 Retail Group added: “We are happy that all the outstanding issues between X5’s shareholders have now been resolved. Remaining the largest minority shareholders in X5, we expect to benefit from the company’s enlarged scale and strong exposure to hypermarkets.”
