Russia’s largest retail group, X5, has agreed to rival retailer, Patterson supermarket chain, for about $275 million.
The agreement will see X5 take over Patterson’s $85 million debts and outlay $189.5 million in equity to take control of Patterson’s 82 stores, located in Moscow, St Petersburg, Kazan and European Russia. X5, owner of the Pererkrestok and Pyaterochka chains, says the move will cement its number 1 position in supermarkets across Russia, increasing its supermarket count by 25%, with 52 locations to be converted to Pererkrestok and 30 smaller stores to be rebranded as Pyaterochka.
X5 Retail Group CEO, Lev Khasis, believes the intergration of Patterson will add to X5’s operational efficiency and cash flow generation outlook.
"The acquisition reinforces X5's number one position in supermarkets and adds high quality locations in key geographic markets with strong demographics for this format. We see substantial scope for raising sales density and profit margins of the acquired stores by rebranding and realigning the value proposition and leveraging X5’s operational scale, distribution infrastructure and efficiency programs. This is an excellent strategic and operational fit for X5 and offers attractive value for our shareholders."