X5 denies merger reports

RIA Novosti / Pavel Lisitsyn
X5 retail group has issued a statement denying it is looking at a merger after reports in Russia’s Kommersant newspaper

Mikhail Fridman, chairman of the Alfa Group Russian retailer's main shareholder, said X5 Retail Group is not planning to merge with a foreign retailer

“We have stated many times that Alfa-Group is a long-term investor in X5 Retail Group. We see tremendous growth potential for the Company and strongly support its focus on development in the still immature and fragmented Russian retail market.  Press speculation about merging X5 with international retailers is unfounded”

The Kommersant report, referring to information leaked to the newspaper, suggested X5 was mulling a merger with either Metro, or Turkey’s Migros, which has operations in Turkey Azerbaijan, Kazakhstan, Macedonia and Kyrgyzstan

UBS retail analyst Svetlana Sukhanova says that X5 is likely to concentrate domestically in the short to medium term.

“There are a number of untapped opportunities in Russia in food retail and we expect X5 to continue to grow within Russia (its market share is around 5%) rather than going overseas in mid-term. In longer term, we can not completely rule out opportunity that X5 will get into strategic partnership with global retailer.”