German retailer Metro says €5.8bn takeover bid is too low
By Tom Sims - Jun 27th, 09:22
Metro said that an unsolicited offer by two prominent investors to take over the German retailer substantially undervalues it and advised shareholders to hold off on taking action until management comments further.
EP Global Commerce, an acquisition vehicle owned by the Czech and Slovak investors, made the takeover offer, which valued the company at €5.8bn.
The retailer, noting that the offer price was only 3% above the closing share price on Friday, said the bid “substantially undervalues the company and does not reflect its value creation plan”.
Metro said management was continuing to transform the company. It said that it would comment further once the full offer document was available and that shareholders should take no action in the meanwhile.
EP Global Commerce, which already holds a stake of nearly 11% in Metro, said on Friday that its offer price of €16 for each ordinary share and €13.80 for each preferred share represented a 34.5% premium to when EP Global Commerce made its initial investment in August.
The firm, co-owned by Czech investor Daniel Kretinsky and Slovak partner Patrik Tkac, said the offer was “a compelling value and a unique opportunity” for shareholders given the difficult market and challenges facing Metro.
Some shareholders are already supporting the bid by the Czech-Slovak duo. Investment firm Haniel has agreed to sell its 15.2% stake, EP Global Commerce said on Friday. And it also said it would exercise a call option for a stake of 5.4% held by an affiliate of Ceconomy.
EP Global Commerce’s offer raises the question about the status of Metro’s plans to sell loss-making hypermarkets chain Real, valued at about €1bn, to a consortium lead by real estate investor Redos.
EP Global Commerce criticised the deal with Redos because the price was too low, Reuters reported in May. But a spokesperson for Metro on Sunday said its plans for the deal remain intact.
Once a sprawling retail conglomerate, Metro has in recent years been restructuring to focus on its core cash-and-carry business, selling off the Kaufhof department stores and then splitting from consumer electronics group Ceconomy.
It still operates in 26 countries with 771 stores and 150,000 employees, but it is trying to offload Real and its operations in China.
The Czech and Slovak bidders signalled that further changes were needed at Metro, though they said they would not close stores in Germany and its core markets or cut jobs substantially.
“Metro needs to regain the capability to swiftly react,” they said, adding that otherwise, it “would be exposed to significant risks due to stagnant or declining results.”
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