UPDATE 1-Russia X5 Retail Group to buy out more franchisees
(Adds analyst comment, source)
MOSCOW, May 28 (Reuters) - X5 Retail Group (PJPq.L), Russia's largest food retailer by revenue, intends to acquire three franchisee chains in both southern Russia and the Volga region, the state Anti-Monopoly Service (FAS) said on Wednesday.
FAS said in a statement X5 had filed for permission to buy out the Tamerlan group of companies, its biggest franchisee partner, which operates more than 120 Pyaterochka discounter stores in the regions of Samara, Volgograd and Rostov-on-Don.
X5, which is controlled by Russian billionaire Mikhail Fridman's Alfa Group, declined to comment. FAS said it would review the petition before July 14, 2008.
Natalia Zagvozdina, consumer sector analyst at Renaissance Capital, said the deal could amount to $150-170 million.
"The sum of the deal can be even smaller. The Tamerlan Group is burdened with debts and is to be sold at a big discount," a source close to X5's talks with Tamerlan told Reuters.
X5 has been buying out its franchisees in the regions since last year and has already closed several deals.
Earlier this month, X5 raised $1.15 billion in a share offering, of which it will use around $730 million to fund the cash portion of the purchase price for Formata Holding B.V., owner of the Karusel hypermarket chain.
"The remaining $420 million allow the company to make at least one major deal," Zagvozdina said.
As of March 31, it had 731 Pyaterochka stores, 183 Perekryostok supermarkets and 16 hypermarkets, and its franchisees operated 711 stores in Russia and Kazakhstan.
X5's revenues for the full year 2007 reached $5.32 billion, up 53 percent from 2006. (Reporting by Maria Plis; Writing by Maria Kiselyova; Editing by Paul Bolding)
