Finland's Kesko in talks to sell Russian food retail business

HELSINKI, Oct (HKSE: 3366-OL.HK - news) 21 (Reuters) - Finland's second-largest retailer Kesko (LSE: 0BNS.L - news) is in talks to sell its food retailing business in Russia to hypermarket group Lenta (Frankfurt: A1XEVQ - news) just four years after opening its first food store in the country.

Several Finnish companies have cut their exposure to neighbouring Russia, where the economy has been hit by the Ukraine crisis, international sanctions, a weak rouble and low oil prices.

"(Lenta) and Kesko have at present not reached an agreement with respect to the potential transaction and there can be no certainty that these discussions will lead to a transaction, or the terms on which any transaction might be agreed," Lenta said in a statement on Friday.

Kesko said in May it was looking into a sale of its Russian food retailing business which has 11 stores in and around St Petersburg and sales of 107 million euros ($116 million) last year.

Lenta is a low-cost retailer operating 156 hypermarkets in 72 cities across Russia as well as 42 supermarkets in Moscow and St Petersburg. It has fared relatively well in Russia's economic crisis thanks to targeted promotions.

Kesko, which also runs hardware stores in Russia, had a growth plan and a sales target of 500 million euros in 2017 for its Russian food retail business.

In August, Kesko sold its smaller sporting goods store chain in the country.

Other Finnish firms, including media group Sanoma (EUREX: 933498.EX - news) , department store chain Stockmann and retail and wholesale drug company Oriola-KD have also pulled out of Russia. ($1 = 0.9195 euros) (Reporting by Jussi Rosendahl, additional reporting by Maria Kiselyova in Moscow. Editing by Jane Merriman)