X5 Retail Regulatory News (FIVE)

4 Dec 2009 07:00

X5 RETAIL GROUP COMPLETES ACQUISITION OF PATERSON SUPERMARKET CHAIN

Amsterdam, 4 December 2009 - X5 Retail Group N.V., Russia's largest food retailer in terms of sales (LSE ticker: "FIVE"), announced today that it has completed the acquisition of Paterson supermarket chain.  X5 received all necessary approvals for the transaction, including approval of the Company's Supervisory Board and an unconditional consent from the Russian Federal Anti-Monopoly Service (FAS).

In accordance with the agreement, X5 purchased 100% of the business and assets of Paterson for a price of USD 189.5 million (equity value) plus assumption of Paterson's net debt in the amount of approximately USD 85 million.  

Paterson is an excellent strategic and operational fit, which offers attractive value for X5's shareholders.  

This acquisition reinforces X5's number one position in supermarkets, providing high quality locations in key geographic markets with strong demographics for this format. X5 expects to realize significant synergies from the rebranding and operational integration of Paterson stores, with strong upside potential in sales density, profitability and cash flow generation.

X5 plans to start the integration process in the first quarter of 2010 and finalize it by mid-year. 

For additional information regarding this transaction please see X5 Retail Group press release dated 25 November 2009. This press release is available on our website at www.x5.ru.

  Note to Editors:

X5 Retail Group N.V. is Russia's largest retailer in terms of sales. The Company was created as a result of a merger between Pyaterochka (soft discounter chain) and Perekrestok (supermarket chain) on 18 May 2006. In June 2008, X5 acquired Karusel hypermarket chain and substantially strengthened its position in hypermarket format.

As at 30 September 2009, X5 had 1,217 Company-managed stores located in Moscow, St. Petersburg and other regions of European Russia, Urals and Ukraine, including 952 soft discount stores, 210 supermarkets and 55 hypermarkets.

As at 30 September 2009, X5's franchisees operated 586 stores across Russia. 

For the full year 2008, X5's net sales including acquired Karusel business on a pro-forma basis totalled USD 8,892 mln, EBITDA reached USD 803 mln, and net profit adjusted for non-cash goodwill impairment charge amounted to USD 112 mln.

For the nine months 2009 X5's net sales totalled USD 6,081 mln, EBITDA reached USD 509 mln, and net profit amounted to USD 121 mln.

X5 Shareholder structure is as follows: Alfa Group - 47.9%, founders of Pyaterochka - 23.1%, X5 Management - 1.9%, treasury shares - 0.1%, free float - 27.0%.

Paterson - is a non-public supermarket chain of 82 stores located in Moscow, the Moscow region, St. Petersburg, Kazan and other cities of European Russia and Urals. Net selling space totals approximately 65 thousand sq.m., while total space amounts to 145 thousand sq.m., approximately 20% of which is owned. In addition to 82 stores in operation, Paterson has a pipeline of four committed stores with preliminary signed lease agreements and one land plot with a long-term lease. 18 additional stores operate under the Paterson brand in Siberia pursuant to franchising agreements (revenues from these stores are not consolidated by the company). 

Paterson does not have any logistics infrastructure. The company's headcount totals approximately 3,800 employees, of which 90% are store personnel and 10% work in the company's headquarters.

Paterson's net sales for the 12 months to 30 September 2009 totaled RUR 10,968 million. Its EBITDA for the 12 months to 30 September 2009 totaled RUR 815 million for an EBITDA margin of 7.4%*. Paterson's net debt stands at approximately RUR 2.5 billion (approximately USD 85 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 identified by 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 other words of similar meaning.

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, a number of which are beyond X5 Retail Group N.V.'s control. As a result, actual future results may differ materially from the plans, goals and expectations set out in these forward-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 any applicable laws or regulations, X5 Retail Group N.V. undertakes no obligation publicly to release the results of any revisions to any forward-looking statements in this document that may occur due to any change in its expectations or to reflect events or circumstances after the date of this document.