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Spanish retail giant Dia to quit France

Spanish discount supermarket group Dia announced Thursday it is selling its troubled French operations, which employ some 7,500 people in 900 stores.

Spanish retail giant Dia to quit France
Spanish firm Dia is the the world's number three discount store operator. Photo: Joel Saget/AFP

Dia, the world's number three discount store operator, said it had already begun the process to sell its entire French division.

"After many months trying to improve the business in France we concluded the best option was to sell the entire operation," said Dia financial communications chief Lara Vadillo.

"We have launched a plan to sell those assets," she said, declining to name a price.

Dia said it had removed the French unit's performance from the group's adjusted earnings report for the first quarter of 2014.

"We took the decision to present our activities in France as discontinued as all the conditions to do so were met," Dia chief executive Ricardo Curras said in a statement.

"The resolution is aligned with our commitment to focus on our core markets and with the responsibility of identifying the best options for our shareholders, employees and franchisees."

Dia made the announcement as it reported underlying group net profit in the first quarter of this year surged by 9.7 percent from a year earlier to €40.1 million ($56 million), after excluding the French business. Net sales fell 2.1 percent to €2.14 billion.

French unions told news agency AFP earlier that they had been informed of the company's "very vague" plans at an extraordinary meeting between management and staff representatives on Tuesday.

At the end of 2013, Dia, which was spun off from the French supermarket giant Carrefour two years earlier, had 7,328 stores in six countries — Spain, Portugal, Argentina, Brazil, China and France.

The 2013 results showed Dia sales in France plunged 10.9 percent from the previous year.

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RUSSIA

Spanish court probes Russian tycoon’s purchase of supermarket chain Dia

Spain's top criminal court said Thursday it has opened an investigation into whether Russian tycoon Mikhail Fridman artificially depressed the share price of supermarket chain Dia before buying the firm.

Spanish court probes Russian tycoon's purchase of supermarket chain Dia
File photo of a Dia supermarket. Photo: AFP

The Kremlin-friendly oligarch appeared in court in Madrid on Monday as part of a separate similar case in which judges are investigating allegations he acted to bring down the value of another Spanish takeover target, digital entertainment firm Zed Worldwide.   

He denied all charges in that case in a statement released after he was questioned in court.

An investigating judge with the National Court “has begun investigating a complaint” against Fridman and his Luxembourg-based investment company LetterOne “in connection with its acquisition of Dia”, according to a document from the court published Thursday.   

In May, LetterOne secured majority control of the struggling supermarket chain via a hostile takeover following a bitter dispute with its previous management as the firm's share price slumped.

The judge is investigating allegations made in an anonymous complaint that LetterOne “maintained a heightened financial tension to lower the share price, until it managed to buy the company,” the court document said.

Spain's Supreme Court had in September given the National Court a mandate to investigate this case which it said could constitute the crime of “market manipulation” and could have had “serious repercussions on… the national economy” given the size of Dia's supermarket network in the country, the document added.

It cited a police report alleging that Fridman acted in a “coordinated and concerted way” through a network of “criminal associates… to create a situation of conflict… and lack of liquidity in the short term” so as to lower Dia's price and buy the firm.   

In a statement, LetterOne called these allegations “totally false and defamatory”.

“The reality is Dia suffered from mismanagement and accounting irregularities were discovered, which negatively affected all shareholders, including LetterOne,” it added.

LetterOne said it was “committed” to investing 1.6 billion euros to protect jobs, suppliers and keep stores open.

Through LetterOne, Fridman also controls interests in telecoms, banking, oil and healthcare.   

The tycoon, who is reportedly close to the Kremlin and was listed by Forbes this year as London's richest resident, is also one of the founders of Alfa Bank, Russia's largest privately-held lender.

READ MORE: From Russia with love: Tycoon buys out ailing Spanish supermarket

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