Metro Suspends Negotiations on Kaufhof Sale as Market Rout Depresses Price
Metro Says Talks for Kaufhof Sale Halted on Market Condition
Ralph Orlowski/Getty Images
Shoppers walk past the Karstadt and Kaufhof department stores in Trier, Germany.
Shoppers walk past the Karstadt and Kaufhof department stores in Trier, Germany. Photographer: Ralph Orlowski/Getty Images
Metro AG (MEO), Germany’s largest retailer, said selling the Kaufhof department-store chain remains part of its strategy after halting negotiations to dispose of a unit that it has sought to exit since 2008.
Conditions for a sale are “not optimal,” Dusseldorf-based Metro said today. Any transaction would require agreement on price, financing and the future of the business and won’t proceed while markets are “fragile,” a company spokesman said.
The shares rose 4.1 percent to 28.38 euros, halting four days of declines, as Metro maintained its earnings forecast after a drop in fourth-quarter sales. The retailer has held talks on selling Kaufhof with bidders including Signa Holding GmbH, an Austrian real-estate company managed by Rene Benko, and Berggruen Holdings, the owner of the competing Karstadt chain.
“It’s probably better to keep Kaufhof for now if they can’t get the price they want,” said Thomas Effler, a Frankfurt-based analyst at WestLB AG. “We’ll probably see some positive developments in the first and second quarters and fundamentals might be attractive again then.”
Chief Executive Officer Olaf Koch said market conditions aren’t suitable “for such an important transaction.”
Berggruen respects Metro’s decision, a spokesman for the New York-based company said by phone today. Signa said in a statement that “postponed is not canceled.”
Metro’s fourth-quarter revenue fell 1.3 percent to 19.5 billion euros ($24.9 billion) amid a “disappointing” Christmas season, the company said, missing the 19.7 billion-euro average estimate of 14 analysts surveyed by Bloomberg News.
Annual Earnings
The retailer reiterated that earnings before interest, taxes and special items last year probably were “slightly below” the 2.4 billion euros reported for 2010. Metro said in November that earnings would rise 5 percent to 10 percent, depending on Christmas sales.
Declining consumption has hurt sales at Metro, whose stores include Saturn consumer-electronics outlets and Real hypermarkets (MEO). German retail sales unexpectedly fell for a second month in November as Europe’s sovereign-debt crisis weighed on the outlook for economic growth, a Jan. 5 report showed.
Revenue at Kaufhof dropped to 1.1 billion euros in the fourth quarter from 1.2 billion euros a year earlier. Sales at Cash & Carry, Metro’s largest unit, were unchanged at 8.6 billion euros in the fourth quarter, while revenue at Media Saturn was also unchanged at 6.6 billion euros.
To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net
To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net
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