Kesko to sell its grocery trade in Russia to Lenta

KESKO CORPORATION STOCK EXCHANGE RELEASE 26.10.2016 AT 06.00 1(2)
Kesko to sell its grocery trade in Russia to Lenta
 Kesko Food Russia Holding Oy, part of Kesko Group, has signed an agreement to sell its grocery trade business in Russia to Lenta Ltd. Lenta is one of Russia's largest grocery trade chains. The aggregate consideration for the disposal is approximately RUB 11 billion (approximately €158 million), which will be paid in cash in connection with the completion of the disposal.

"Kesko's strategic objective is growth in the Finnish grocery trade, in the building and technical trade and in the car trade. We concentrate on the development of the Finnish grocery trade and dispose of the grocery trade in Russia, the growth of which would have required significant capital expenditures. The disposal will have a minor impact on Kesko's net sales, but it will improve Kesko's profitability and cash flow," says Kesko's President and CEO Mikko Helander.
In 2015, the net sales of Kesko's grocery trade in Russia were €106 million and operating profit was €-14 million. The disposal includes 11 food stores operating in the St. Petersburg and Leningradskiy regions, three land plots in the Moscow and Leningradskiy regions, as well as administrative and support functions. The business and assets are included in the six legal entities which are sold in the transaction (business entity OOO Kesko Food Rus and five Russian real estate companies). The sold companies have a total of approximately 1,300 employees.
Lenta is the largest hypermarket chain in Russia in terms of selling space and the country's fifth largest retail chain in terms of 2015 sales. Lenta operates 156 hypermarkets in 72 cities across Russia and 42 supermarkets in Moscow and St. Petersburg, with a total of approximately 968,595 sq.m of selling space. Lenta's largest shareholders include TPG Capital and the European Bank for Reconstruction and Development.
Kesko Corporation's outlook in respect of net sales and comparable operating profit for the period Q3/2016-Q2/2017 remains unchanged. The outlook according to the half year financial report published on 3 August 2016 was as follows: Kesko Group's net sales and comparable operating profit for the next 12 months are expected to exceed the level of the preceding 12 months. Estimated based on the current exchange rate, Kesko Corporation will record a non-recurring expense of approximately €69 million on the disposal for the last quarter of 2016.
The disposal is yet subject to the approval of the Russian competition authority, The Federal Antimonopoly Service of the Russian Federation, FAS, and the fulfilment of the other terms and conditions of the disposal. The processing of the matter and the disposal are expected to be completed on November 30, 2016.
Further information:
Jukka Erlund, Senior Vice President, Chief Financial Officer, Kesko Corporation, tel. +358 105 322 113, jukka.erlund@kesko.fi
Jorma Rauhala, Executive Vice President and Senior Vice President for the grocery trade division, tel. +358 105 322 211, jorma.rauhala@kesko.fi
Riikka Toivonen, Head of Financial Communications, Kesko Corporation, tel. +358 105 323 495, riikka.toivonen@kesko.fi
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Kesko is a Finnish listed trading sector company. Kesko operates in the grocery trade, the building and technical trade and the car trade. Its divisions and chains act in close cooperation with retailer entrepreneurs and other partners. Kesko's net sales were €9 billion (rolling 12 months, 1 July 2015-30 June 2016) and the total number of personnel was approximately 30,000 as at 30 June 2016. Kesko has over 1,500 stores engaged in chain operations in Finland, Sweden, Norway, Estonia, Latvia, Lithuania, Russia, Belarus and Poland. Kesko's shares are listed on Nasdaq Helsinki. The company's domicile and main premises are in Helsinki. Kesko is the most sustainable trading sector company in the world (The Global 100 Most Sustainable Corporations in the World list). www.kesko.fi