German retail group Metro is calling on its shareholders not to accept the EP Global Commerce takeover bid because it would be too low. The food service company has just published sound quarterly results.
"Price is inadequate"
EP Global Commerce, the investment fund owned by Czech billionaire Daniel Kretinsky and Slovak businessman Patrik Tkac, wants to pay 16 euros per ordinary share and 13.80 euros per preferential share. That comes down to a valuation of around 5.8 billion for Metro. The investor, who already owns 32.7% of the shares, wants the foodservice wholesaler to withdraw from China, but promises not to close stores on the German home market.
In an initial reaction, Metro had already rejected that bid, and after a thorough analysis, CEO Olaf Koch now confirms that position: “We consider the price offered by EPGC to be inadequate as it substantially undervalues Metro and, even after reviewing its further conditions, recommend our shareholders not to accept the offer.” According to Koch, the current strategy guarantees sustainable and profitable growth and the company is ready to play a leading role in a changing hospitality market.
Comparable sales growth
The recently published figures for the third quarter of the broken financial year 2018/2019 seem to confirm Koch’s vision. Comparable sales increased by 3.4 percent and operational cash flow (EBITDA) amounted to 316 million euros, an increase of 3.7 percent. "Metro hits its twenty-fourth consecutive quarter of like-for-like growth," emphasizes the CEO. The group made progress in almost all regions, including China. But the Russian market remains very difficult: turnover decreased by 4.8 percent. The turnaround takes longer than expected and price investments continue to weigh on profitability.
Metro adds that the exclusive negotiations on the sale of the hypermarket chain Real with property investor Redos are progressing very well. In the Benelux, the group owns the Makro cash & carry branches and the Metro food service wholesale business.