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Billionaire Amaral Sees Higher Eurocash Payout, Takeovers

Eurocash SA (EUR), Poland’s biggest distributor of non-durable consumer goods, is looking for takeover targets and plans to increase a dividend after profits surged last year, its controlling shareholder said.

The company, whose value has jumped almost 18-fold since selling shares in an initial public offering in 2005, bought the Tradis distributor from Emperia Holding SA (EMP) for 1.1 billion zloty ($343 million) in 2011, solidifying its leading position in the local food wholesaling industry.

“We are now at the beginning of the road,” Chief Executive Officer Luis Amaral, who owns 44 percent of the Komorniki, Poland-based company, said in a phone interview on March 13. “We want to be a buying power to traditional retailers and to grow we need to keep consolidating if there’s an opportunity.”

Takeovers and rising consumer demand in the European Union’s biggest eastern economy helped Eurocash almost double profit to a record last year. Its stock will join Warsaw’s benchmark WIG20 Index after the trading session today as its market capitalization reached $2.4 billion and valued Amaral’s stake at $1.05 billion.

Higher Dividend

The company should increase its dividend and return to its shareholders half of last year’s 250.4 million-zloty profit, Amaral said. Eurocash paid out 18 percent of its 2011 consolidated profit as a dividend.

“My recommendation is a 50 percent dividend payout, so we’re coming back to the previous dividend policy before buying Tradis,” said Amaral, a Portugal native.

The distributor, which Amaral bought from Lisbon-based Jeronimo Martins SGPS SA (JMT) for 30 million euros ($39 million) in 2003, also plans to cut its debt to “have more bullets in its gun” if a takeover opportunity arises, he said.

“For takeovers we look at food distribution in general. We’re focused on wholesaling,” said Amaral. “We started the process of looking beyond Poland.”

Amaral sees “traditional, small stores” and discount retail chains as “winners” on the growing Polish market. “Hyper- and supermarkets, which in the past were seen as segments of the future, are declining,” he said.

Eurocash shares jumped 1.9 percent to a record 55.4 zloty at 9:21 a.m. in Warsaw, extending this year’s advance to 27 percent. Warsaw’s benchmark WIG20 Index declined 2.8 percent this year. The company sold shares in its 2005 IPO at 3.1 zloty each, according to data compiled by Bloomberg.

To contact the reporters on this story: Piotr Bujnicki in Warsaw at pbujnicki@bloomberg.net; Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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