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Metro Said to be Near Sale of East European Stores

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Nov. 29 (Bloomberg) -- Metro AG, Germany’s biggest retailer, is near an agreement to sell its Real grocery stores in eastern Europe to Groupe Auchan SA of France for about 1 billion euros ($1.3 billion), according to two people familiar with the negotiations.

The companies are discussing final terms of the deal and an announcement may come as early as this week, though could take longer, said the people, who asked not to be identified because talks are private. The sale would include Real’s operations in Poland, Romania, Russia and Ukraine, while excluding those in Turkey and some real estate, according to one of the people.

Metro spokesman Ruediger Stahlschmidt and Francois Cathalifaud, a spokesman for Auchan, declined to comment.

“It’s the first big action in a very long time, so it will be a breakthrough if they can pull it off,” said Sebastian Frericks, an analyst at Bankhaus Metzler. The price is “really good,” especially as it doesn’t include Turkey, he said.

Metro shares rose 1.3 percent to 21.59 euros at the close of trading in Frankfurt, after gaining as much as 4.2 percent.

Chief Executive Officer Olaf Koch, who took office at the start of the year, has pledged to focus on the Cash & Carry wholesale unit and Media-Saturn electronics stores while cutting investment in Kaufhof department stores and Real, both of which it has tried to sell for several years. The Dusseldorf-based company cut its 2012 profit forecast last month, saying Europe’s sovereign-debt crisis is weighing on sales.

Revenue at Real, which accounts for about 17 percent of Metro’s total sales, dropped 2.3 percent to 11.23 billion euros last year. The business operates 420 stores, of which 312 are in Germany, according to Metro’s website.

Metro’s majority shareholder Franz Haniel & Cie GmbH said on Nov. 27 that it plans to reduce its stake in the company to 30 percent from 34.2 percent within 18 months.

To contact the reporter on this story: Aaron Kirchfeld in London at akirchfeld@bloomberg.net; Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Jacqueline Simmons at jackiem@bloomberg.net Celeste Perri at cperri@bloomberg.net

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