BC Partners Ltd. hired JPMorgan Chase & Co. (JPM) and Bank of America Corp. to review options such as a sale of its stake in Turkish retailer Migros Ticaret AS (MGROS), said two people with knowledge of the matter. The stock jumped.
The Turkish supermarket operator has drawn interest from international retailers and private-equity companies, said the people, asking not to be identified because the deliberations are private. An option to sell shares on the market has been discussed internally, although an equity offering is unlikely due to political unrest in Turkey, the people said. No decision has been made yet, they said.
The consortium owning Migros is set to consider a sale even as protests against Prime Minister Recep Tayyip Erdogan and his government have roiled Turkey’s markets, with the stock index down 2.8 percent since the start of the year. Emlak Konut Gayrimenkul Yatirim Ortakligi AS (EKGYO), a state-owned property developer, slumped the most on record on June 10 after the company delayed a share sale, citing stock market turmoil triggered by the anti-government protests in Turkey.
Migros surged as much as 11 percent to 21.9 liras in Istanbul, the most since 2011, and closed up 7.1 percent at 21.15 liras.
“BC Partners’ potential exit story is the main trigger,” Basak Dinckoc, an analyst at Is Investment, said in an emailed note today. Is Investment has a buy rating on the retailer.
Last year, publicly traded Migros was the object of takeover speculation after the Financial Times reported that Wal-Mart Stores Inc. (WMT), the U.S. retailer, was seeking a controlling stake in the retailer. The transaction would have valued Migros at more than $4 billion including debt. The Turkish company has a market value of almost $2 billion today.
CarrefourSA Carrefour Sabanci Ticaret Merkezi AS (CARFA), a joint venture of French retailer Carrefour SA (CA) and Haci Omer Sabanci Holding AS (SAHOL), may also consider acquiring Migros, Haluk Dincer, head of the retail and insurance businesses at Sabanci Holding, said in May.
A representative of BC Partners declined to comment. Ozgur Tort, chief executive officer of Migros, declined to comment in an e-mail. Spokeswomen at Bank of America and JPMorgan declined to comment.
BC Partners, based in London, in 2008 acquired control of Migros, Turkey’s largest supermarket chain, for about $3.3 billion from Koc Holding AS (KCHOL) in what was then the country’s biggest takeover by a leveraged-buyout firm, giving the private-equity firm access to close to 1,000 stores in Turkey and neighboring countries at the time. The acquisition was financed by the buyout firm’s 5.9 billion-euro VIII fund.
The strategic review is unlikely to produce an outcome before the fourth quarter, one of the people said.
BC Partners owns Migros with investors including TurkVen, a Turkish buyout firm, and DeA Capital. The consortium controls Migros through holding vehicle that owns about 80 percent of the Turkish retailer. BC Parters has about 80 percent of the vehicle, while DeA Capital has about 17 percent and TurkVen owns the rest. Paolo Ceretti, CEO of DeA Capital (DEA), said in April that DeA was “totally aligned” with BC Partners and that its Migros stake “is not on sale separately” from BC Partners’ interest.
Migros has 962 stores in total, including 32 in Kazakhstan and Macedonia. The company’s enterprise value, its market value plus debt, was 13 times earnings before interest, tax, amortization and depreciation, or EBITDA, in 2012, according to company filings.