X5 Retail Regulatory News (FIVE)

14 Dec 2007 17:02

X5 Retail Group N.V.14 December 2007 X5 RETAIL GROUP N.V. SIGNS AN AGREEMENT TO ACQUIRE STRANA GERKULESIA RETAIL CHAIN IN MOSCOW REGION Amsterdam, 14 December 2007 - X5 Retail Group N.V., Russia's largest foodretailer in terms of sales (LSE ticker: "FIVE"), announced today that it hassigned an agreement to acquire 100% of the business and assets of the StranaGerkulesia ("Land of Hercules") retail chain operating in the City of Moscow andthe Moscow and Tver regions, for a total consideration of USD 65 million,including debt. The Company plans to close the deal by the end of 2007. X5 Group will acquire a total of 29 discounter stores, of which 26 areoperational and three are scheduled for opening in Q1 2008. Five stores arelocated in Moscow, 16 stores operate close to Moscow and eight stores arelocated in other areas of the Moscow region and in Tver. The total purchased area is 27.1 thousand sq.m, which also includes an officebuilding and construction in progress that potentially can be converted intoselling space in the future. Over 11 thousand sq. m. are owned, whilst theaverage outstanding length of lease agreements for the remaining space is over 5years. The total net selling space of the Strana Gerkulesia stores is 12.9 thousandsq.m., of which 1.2 thousand sq.m. represent the outlets to be opened in Q12008. Lev Khasis, X5 Retail Group CEO, commented: "This transaction is an important step towards further strengthening ourleadership in Moscow and its neighbouring areas. The stores of StranaGerkulesia organically enhance and expand our existing chain of soft discountersand establish X5's presence in new cities and towns of the Moscow region." Andrei Gusev, Mergers, Acquisitions and Business Development Director at X5Retail Group added: "As Strana Gerkulesia stores operate in the region where X5 historically has avery strong presence we expect that their integration into our soft discounterchain will result in significant synergies. Re-branding, changes in assortmentand introduction of X5's pricing policy will enable us to increase the sales persquare meter of the new stores to reach Pyaterochka's average level. Moreover,we expect that revised purchasing terms, improved logistics and substantialreductions in administrative expenses will bring the acquired stores'operational efficiency to the levels that we enjoy in Moscow and the Moscowregion already by the second half of 2008". Note to Editors: X5 Retail Group N.V. is Russia's largest food retailer in terms of sales. TheCompany was created as a result of a merger between Pyaterochka (soft discounterchain) and Perekrestok (supermarket chain) on 18 May 2006. As of 30 September 2007, the Group had 573 company-managed soft discount storeslocated in Moscow (256), St. Petersburg (234) and other Russian areas (83), 163company managed supermarkets across Central Russia and Ukraine, including 101stores in Moscow (Moscow region and Yaroslavl region), and 13 company managedhypermarkets. As of 30 September 2007, X5's franchisees operated 627 stores across Russia andKazakhstan. The Group's net sales for the first nine months 2007 reached USD 3,618 million,an increase of 50% year-on-year. Gross profit for the period totaled USD 946million, EBITDA amounted to USD 311 million. Forward looking statements: This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identifiedby the fact that they do not only relate to historical or current events.Forward-looking statements often use words such as" anticipate", "target", "expect", "estimate", "intend", "expected", "plan", "goal" believe", or otherwords of similar meaning. By their nature, forward-looking statements involve risk and uncertainty becausethey relate to future events and circumstances, a number of which are beyond X5Retail Group N.V.'s control. As a result, actual future results may differmaterially from the plans, goals and expectations set out in theseforward-looking statements. Any forward-looking statements made by or on behalf of X5 Retail Group N.V.speak only as at the date of this announcement. Save as required by anyapplicable laws or regulations, X5 Retail Group N.V. undertakes no obligationpublicly to release the results of any revisions to any forward-lookingstatements in this document that may occur due to any change in its expectationsor to reflect events or circumstances after the date of this document. For further details please contact Anna Kareva Alexandra GalimovaIR Director Head of PR DepartmentTel.: +7 (495) 980-2729, ext. 22 162 Tel.: +7 (495) 950-5577e-mail: anna.kareva@x5.ru e-mail: alexandra.galimova@x5.ru This information is provided by RNS The company news service from the London Stock Exchange