The Work

December 9, 2010 4:35 PM

Hogan Lovells, Skadden Helm $1.65B Russian Retail Deal

Posted by Claire Zillman

Hogan Lovells and Skadden, Arps, Slate, Meagher & Flom took lead roles on the biggest-ever deal in the Russian retail sector--a merger aimed at thwarting Wal-Mart's attempts to enter the Russian market. 

On Monday, X5 Retail Group, the owner of Russian discount chain Pyaterochka, agreed to buy the Moscow-based Kopeyka retail chain for $1.65 billion, according to X5's statement and Legal Week, a sibling publication. Bloomberg Businessweek reports that Wal-Mart had been trying to acquire Kopeyka, but couldn't reach an agreement. 

Hogan Lovells steered the negotiations for X5, a longtime client. According to a Hogan Lovells statement about the deal, the firm also advised the company on its acquisition of the Paterson supermarket chain in Russia, the launch of its Russian e-commerce business, and the implementation of a $1 billion call option agreement in 2008 relating to the purchase of Karusel, a Russian hypermarket chain. The firm also helps manage X5’s IP portfolio, the firms says.  

Hogan Lovells's deal team was led by Moscow managing partner Oxana Balayan. Partner Karen Hughes, counsel Richard Cowie, Maria Baeva, Taras Oksyuk, and associates Matthew Legg, Shamil Sadykov, Bourn Collier, Alexey Shmelev, and Peter Khokhlov also worked on the deal, according to the firm statement.

Moscow partner Dmitri Kovalenko led Skadden's representation of Kopeyka, along with partners Linda Davies, Pranav Trivedi, and Hunter Baker, reports Legal Week. Kovalenko represented the owners of the Paterson supermarket chain in its sale to X5, according to his firm bio.

X5's statement says the merger will reinforce its position as Russia's top retailer by sales volume. X5, a subsidiary of billionaire Mikhail Fridman’s Alfa Group, operates 1,232 Pyaterochka stores, while Kopeyka--currently Russia's number three discount retailer--owns about 660 retail stores, including 329 in the Moscow area. According to Bloomberg, the deal will better position X5 to compete with Wal-Mart, which is expected to move into Russia in two to three years.

The deal, which includes the assumption of debt, also illustrates increased confidence in the Russian consumer market, says Dealbook. Rising commodity prices and consumer spending are spurring Russia's economic recovery, reports Bloomberg. According to its statement, X5 plans to convert Kopeyka stores to Pyaterochka stores by the end of 2012. 

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