Metro Said To Reply To Approach From Investor In Appliance Unit

By Steve Wynne-Jones
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Metro Said To Reply To Approach From Investor In Appliance Unit

Metro AG told the founder of Media Markt that it needs more financial information on any potential offer before it can consider selling the unit that owns the electronics chain, a person familiar with the matter said.

The German retailer sent a letter Friday to the investment firm of Erich Kellerhals, owner of about 22 per cent of the division, saying it needs to share more details on financing and investment partners if it intends to reopen discussions on the future of the electronics business, according to the person, who declined to be identified as the letter is private.

Kellerhals, who founded Media Markt in 1979 and later sold it, sent Metro chief executive officer Olaf Koch a letter in December saying he was interested in buying the portion he doesn’t already own, or dividing the unit, two people familiar with the matter said. The business, which also includes the Saturn chain, may be worth as much as 5 billion euros ($5.6 billion), according to Sanford C. Bernstein analysts.

A spokesman for Convergenta, Kellerhals’ company, said the December proposal included no financial details because it hadn’t yet conducted due diligence. Convergenta executive Ralph Becker was cited by Germany’s Frankfurter Allgemeine Zeitung newspaper as saying the firm is ready to make a new offer and has two investors with retail experience in its camp.

Metro’s restart of communications with Kellerhals comes as CEO Koch tries to remake Germany’s largest retailer, which has been suffering from stagnating profit and declining sales. Less than two weeks ago he reached an agreement to sell Germany’s Galleria Kaufhof department-stores to Hudson’s Bay Co. of Canada for $3.2 billion, including debt and other liabilities.


Explore Options

Last year, Metro hired Deutsche Bank AG to explore options for Media-Saturn, people with direct knowledge of the matter said. The alternatives at the time included a sale, spin-off or initial public offering.

Metro said Friday that it has “absolutely no offers or concepts” from Kellerhals and would “of course diligently examine a serious suggestion from Convergenta.” Kellerhals sold Media Markt to a predecessor company of Metro in 1988, which two years later took over Saturn.

Media-Saturn’s sales rose 4.8 per cent to 12 billion euros during the first half of Metro’s current fiscal year, and earnings before interest and taxes before special items increased 34 per cent to 369 million euros.


Metro rose 0.8 per cent to 29.86 euros at 4:26 p.m in Frankfurt on Friday.

News by Bloomberg, edited by ESM

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