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. Last Updated: 07/27/2016

X5 Buys Korzinka to Add Outlets

X5 Retail Group, the country's largest supermarket company, said Friday that it agreed to buy smaller grocery chain Korzinka for $115 million, adding 22 stores in the Lipetsk region.

Korzinka will have sales of about $190 million this year, excluding sales tax, X5 said. Korzinka runs 19,966 square meters of selling space in Lipetsk, about 500 kilometers from the capital.

X5 aims to add a total of 150,000 square meters this year, raising its selling space by one-third. The company is also opening more outlets to boost market share.

"The deal lessens concern that the company will significantly under-deliver on its promised expansion this year," Alfa Bank analyst Brady Martin said. "We would expect significant improvements in the acquired chain in terms of like-for-like and margin performance."

X5 will rebrand 15 Korzinka stores as Pyatyorochka discount supermarkets, turn six others into supermarkets and one into a superstore, it said in the statement.

The acquisition "underpins X5's focus on regional expansion and supports the group's intention to secure clear leadership in every market," chief executive Lev Khasis said in the statement. "Korzinka fits organically into the multiformat growth strategy of our group."

X5 said on Oct. 11 that it had added about half of the planned new selling space for the year in January through September and that it would accelerate the pace in the fourth quarter.