Metro Said to Be in Talks to Sell Non-German Real Operations

Metro AG is in advanced talks with two companies to sell the non-German operations of its Real grocery stores as Chief Executive Officer Olaf Koch focuses on core markets, according to two people familiar with the matter.

French retailer Auchan is the leading bidder to buy Real’s international business, which includes stores in Poland, Russia, Ukraine and Turkey with sales of about 3 billion euros ($3.8 billion), said the people, who asked not to be identified because the talks are private. No final decision has been made, and Metro still may decide against a sale, they said.

Dusseldorf-based Metro is focusing on its Cash & Carry wholesale business and the Media-Saturn electronics stores while cutting investment in Kaufhof department stores and Real, both of which it has said it may sell. Koch is seeking to address falling sales in Europe as the region’s economy approaches the second recession in three years.

“Such a potential transaction would not solve Metro’s operational issues, but it would certainly help management’s credibility and reduce the complexity of the business,” Jurgen Kolb, an analyst at Cheuvreux, said in a note today. He rates the chances of a deal for the assets taking place as 50-50.

A Metro official declined to comment and referred to previous company statements that it was reviewing all options for the Real business. Francois Cathalifaud, a spokesman for Auchan, said the company doesn’t comment on “market rumors.”

Metro rose as much as 4.4 percent in Frankfurt trading today. The stock, which has fallen about 15 percent this year, traded up 3.7 percent at 24.64 euros as of 11:53 a.m.

Metro on July 31 posted second-quarter profit that beat analysts’ estimates as sales rose in Germany and at the Cash & Carry and Media-Saturn units. Earnings before interest, taxes and special items rose 2.6 percent to 314 million euros on sales of 15.8 billion euros.

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