An investment vehicle controlled by Czech billionaire Daniel Kretinsky has offered to buy German retailer Metro Group in a deal that would value its shares at €5.8bn.
The offer would see EP Global Commerce controlled by Mr Kretinsky and his Slovakian business partner Patrik Tkac pay €16 in cash for Metro’s shares and €13.80 for its preference shares.
A deal would mark the latest foray into western Europe by Mr Kretinsky, the chairman of football club AC Sparta Prague, who last year bought a stake in the French daily Le Monde via his Czech Media Invest vehicle. He is best known in European dealmaking circles for his purchases of energy assets in Germany, Italy and the UK via EPH, a group he founded in 2009.
The bid comes after EP Global Commerce initially built a stake in Metro in August 2018, that now sits at 10.9 per cent. In a statement, EP Global Commerce said it had secured backing representing more than 31 per cent of Metro’s shares through irrevocable commitments and options.
“Metro needs to regain the capability to swiftly react to the dynamically changing market environment. This requires implementation of a number of initiatives in its organisation, business and processes,” EP Global Commerce said. “Without the capability to execute such changes, the company would be exposed to significant risks due to stagnant or declining results.”
Shares in Metro have climbed 45 per cent over the past year, closing at €15.55 on Friday, meaning that the offer represents a thin premium. EP Global Commerce said its offer was 34.5 per cent premium to when it first entered the stock in August.
Metro said that it would assess the offer once it had received all documentation, but advised shareholders not to sell to Mr Kretinsky and Mr Tkac in the meantime.
Metro generated €36.5bn in global revenue last fiscal year, a 1.6 per cent drop compared with the previous year, but pre-tax profits fell 10.9 per cent to €578m.
Metro was once a retail conglomerate with activities stretching from electronics to department stores, but under chief executive Olaf Koch it has been offloading assets in a bid to focus on its food business. It runs 760 cash-and-carry stores in 25 countries.
In 2015, Metro sold department store chain Kaufhof to Canadian retailer Hudson’s Bay, and two years later, it hived off its consumer electronics retailer MediaSaturn into independently listed company Ceconomy.
In early May, the retailer entered exclusive talks over the sale of its supermarket chain Real with a consortium of buyers led by Hamburg-based property group Redos, which would pay €500m in cash for the supermarket’s real estate assets and see them take on about €500m in debt from Metro.
EP Global Commerce said that it supported Metro’s plan to dispose of Real also backed Metro’s efforts to dispose of its Chinese business.
Mr Kretinsky said that his vehicle had secured the support of Metro shareholder Haniel, which owns a 15.2 per cent stake, in the form of an irrevocable commitment. It also holds a call option with another shareholder, Ceconomy, that would secure its 5.4 per cent stake.