Metro rejects 5.8 billion-euro takeover bid

Metro is disappointed in a takeover bid by shareholder group EP Global Commerce, which is offering 5.8 billion euros for the holding behind Makro and Real.

Nice promises for Germany?

The investment group founded by Daniel Kretinsky and Patrik Tkac wants to take over all shares of the German retail holding. With a valuation of more than six times last year’s gross profit, they consider the offer to be irresistible and a unique opportunity. EP Global Commerce also promises not to close any stores in Germany or in other core markets. In addition, the two men promise they have no plans for substantial layoffs. 

Thy also do insist the chain needs to retreat from China. The investors are also opposed to the planned sale of the German chain Real to Redo, because they consider the price that was agreed upon to be too low.

Offer is “serious undervaluation”

It was well known that EP Global Commerce had been aiming for a takeover for a while: Czech investor Daniel Kretinsky and his Slovakian partner bought themselves a part of the chain back in August 2018, when Metro’s stock value had plummeted to a historic low. The two emphasise that their offer is now 34.5 % higher than the price back then. However, the stock market immediately reacted enthusiastically to the bid, causing EP’s valuation to be only 3 % higher than the stock market value.

Right away, Metro responded by calling the bid a serious undervaluation and claiming it does not reflect the management’s “value creation plan”. Still, the company promises to study the offer as soon as all documents are available. While waiting for a definitive statement, German investors are calling for a stop to stock sales, since those might make Metro powerless against the coup plotters.

A third of all shares

Apart from the acquisition attempt, EP Global Commerce has also raised its interest in Metro up to 32 %. Kretinsky’s company is taking over the 5.4 % shares of former sister group Ceconomy. They have also bought the shares of investor Haniel (representing a 15.2 % interest). Before that, the syndicate already controlled 10.9 % of all shares.

EP Global Commerce once again stresses that Metro should win back the capacity to react quickly. If they fail to do so, the retail group will be exposed to serious risks caused by stagnating or receding results, according to the investment group.