OREANDA-NEWS. On 23 December 2008 X5 Retail Group N.V., Russia's largest retailer in terms of sales (LSE ticker: “FIVE”), and A5 Pharmacy Chain, one of Russia’s leading pharmacy retailers, announced they have entered into a partnership agreement.

In accordance with the agreement, X5 Retail Group will grant A5 preemptive rights to rent space adjacent to X5’s food retail stores at commercial market rates, at properties owned or leased by the Company. The agreement grants X5 a call option to acquire the entire A5’s business in two years with a discount that will depend on performance of A5’s pharmacies located on X5’s premises.

Lev Khasis, X5 Retail Group CEO, commented:

“This partnership is an opportunity to enhance our customer appeal and convenience by locating pharmacies adjacent to X5 food retail stores. We have always seen the potential for synergies between pharmacy and food retail, and are excited about pursuing these opportunities together with A5. The agreement does not call for any cash settlement, which is important in the current market environment. At the same time we will have the option to purchase the business in two years if it meets our criteria for performance, market fundamentals and prospects.”

Roman Buzdalin, the Chairman of the Board of A5 Pharmacy Chain, added:

“Partnership with the unrivalled leader in Russian retail gives us a unique opportunity to strengthen A5’s competitive positions and ensure strong organic growth in current economic conditions. X5’s strength and leadership makes it our partner of choice, and we see this agreement as a major step forward in our strategy to build A5’s leadership in the Russian pharmacy market.”