Rolf Group, the biggest Russian dealer of foreign cars, said Monday that it was in takeover talks with Avelon Group, a Finnish vehicle logistics service provider.

Rolf has "started due diligence'' for a possible combination with Helsinki-based Avelon to create a vehicle logistics business with sales of $500 million in 2009 and 1,200 employees in seven countries, the Russian company said in a statement.

A deal would create a business arranging transport for 25 foreign car brands eager to tap the fast-growing Russian market.

The business would also be a market leader in Denmark, Estonia, Finland and Sweden.

"Due diligence is under way on the deal, which will give Rolf majority control with Avelon management playing a leading role in the enlarged business," said an industry source familiar with the talks.

The source said the transaction was expected to wrap up within a few months.

No anti-monopoly issues were foreseen, the source added.

Moscow-based Rolf recorded a 43 percent increase in retail sales in 2007 as it added five brands to its showrooms, including Ford's Land Rover sport utility vehicles and Toyota's Lexus luxury cars.

It features a total of 13 foreign car brands in its portfolio now and forecasts group revenues of more than $5.2 billion this year.

Rolf said the transaction remains subject to the satisfactory conclusion of due diligence with further information only being available at the completion of any deal.

Bloomberg, Reuters, MT