The price of X5’s stake was calculated on the basis of the company’s 2008 sales performance. As a result of the deal, X5 gains full control of the leading discounter chain in Yekaterinburg and Chelyabinsk, which currently operates 103 Pyaterochka stores with 37,000 sq m of net selling space.

The franchisee’s 2008 net retail revenue was 6.8 billion rubles ($272 million). Since two years, X5 has been on a consolidation drive to bring the Pyaterochka’s operations in the two Urals cities under its control.

X5, which is also Russia’s largest food retailer, has been on an expansion drive lately and has opened two new Karusel-branded hypermarkets. It also said it would open factories for processing frozen meat and fish products. One plant would open in Moscow in November and supply to the chain’s outlets in Moscow and St. Petersburg, as well as some regional hypermarkets.

Setting up its own processing unit is a move towards keeping prices low for consumers, the retail major said. Products packaged at this unit would cost about a third less than similar products at the company’s stores. A top company official said the group will open more plants next year in all the 10 regions where it has an existence. It is not clear what the group’s spending will be on these investments, but the company said it has started on the process of financing the project.

X5 recently chose MTS, Russia’s largest mobile phone operator, to be its up Mobile Virtual Network Operator (MVNO). MTS has signed a memorandum of intent with X5, but Mikhail Susov, head of X5’s Perekrestok stores, refused to officially comment on the news. “We are optimistic about the project to set up a mobile virtual network operator. We have reached tentative agreements with one of the Big Three operators and with two regional operators,” he said. X5 Retail Group NV is the largest retail company in Russia in terms of sales. The company uses a multi-formatted strategy to develop three formats: soft discounters, supermarkets and hypermarkets.