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UPDATE 2-Retailer Lenta open to more M&A after Billa Russia deal

(Adds detail, CFO quotes)

MOSCOW, May 19 (Reuters) - Food retail group Lenta will keep a lookout for more M&A opportunities in Russia after it agreed to acquire the supermarket business of Billa Russia for 215 million euros ($263 million) in a deal seen boosting its presence in Moscow’s prime locations.

The deal is the second retail acquisition in Russia in as many days after retail group Magnit agreed to acquire 100% of shares in the Dixy retail chain for around $1.25 billion, closing the gap on market leader X5.

CFO Rud Pedersen said the acquisition was a key element in Lenta’s strategy to double its revenues to 1 trillion roubles ($13.55 billion) by 2025, announced in March. He said the company was on the lookout for further deals to help it reach that goal.

“Inorganic growth is always opportunistic,” he said. I think its fair to say...that we are not the only ones who see an opportunity for taking an active part in the consolidation of the industry.

“It is difficult to put an exact timing on it. We will continue to focus on both organic and inorganic growth opportunities.”

Lenta’s shares were around 2.7% higher by 0937 GMT.

Lenta will integrate 161 supermarkets, supply chain infrastructure and more than 5,400 Billa Russia employees into its retail network, after which the Billa brand will be discontinued in Russia.

“We are planning to finance the deal through cash and drawing down some already available credit limits, but all within the previous guidance that we gave for this year,” Pedersen said.

Lenta said the transaction, expected to be finalised this summer, would give it food retail market share of about 3% in and around Moscow, boosting its presence in locations with high sales density and improving its online offering.

“The acquisition of Billa Russia’s supermarkets gives us access to mature stores with established customer traffic, including in central Moscow neighbourhoods, and instantly doubles Lenta’s footprint in the supermarket segment in terms of the number of stores overall,” CEO Vladimir Sorokin said in a statement.

$1 = 0.8170 euros $1 = 73.8054 roubles Reporting by Alexander Marrow; Editing by Tom Hogue, Louise Heavens and Jane Merriman

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