CarrefourSA of Turkey May Consider Migros Deal to Expand

CarrefourSA Carrefour Sabanci Ticaret Merkezi AS, the Turkish grocer in which Haci Omer Sabanci Holding AS bought a controlling stake from Carrefour SA of France, may consider buying Turkish retailer Migros Ticaret AS to speed growth.

“We will consider acquisitions for inorganic growth in the strategic plan we will prepare, including a Migros buyout,” Haluk Dincer, head of retail and insurance business at Sabanci Holding said in a news conference in Istanbul today. “I don’t think the possible acquisition of Migros will create any violation of competition law.”

CarrefourSA, based in Istanbul, is seeking to grow sales annually by 15 percent after Sabanci Holding agreed on April 30 to increase its stake to 50.8 percent. Sabanci is buying 12 percent of the unit from Carrefour of France for 141 million liras ($79 million).

In the short term, a deal for Migros may not be realistic, said Cemal Demirtas, head of research at Ata Invest in Istanbul. Sabanci may “prioritize steps to move CarrefourSA to profit before acquisitions,” Demirtas said.

Growth Area

Sabanci Holding, which has partnerships with E.ON AG, Citigroup Inc. and HeidelbergCement AG, plans to expand its retail business. It also operates electronics retailer Teknosa Ic & Dis Ticaret AS, and the industry is one of the major growth areas of the conglomerate, Turkey’s second biggest after Koc Holding AS, Dincer said. The retail industry in Turkey, including hypermarkets and individually-owned small grocers, is about 130 billion liras, Dincer said.

Shares of Migros, which is owned by a group of private equity investors led by BC Partners Ltd, rose as much as 4.7 percent to 24.35 liras in Istanbul and traded at 23.70 liras at 5:17 p.m., the highest since Dec. 13. CarrefourSA, which has a 3 percent free float trading on Borsa Istanbul, fell 11.2 percent to 17.05 liras, heading for the biggest decline since August 2011. Sabanci Holding rose 4.93 percent to 11.7 liras, a record close. Carrefour rose as much as 4.2 percent to 22.835 euros in Euronext.

“We know CarrefourSA is under grown,” Dincer said. “We will do our best for fast and profitable growth.”

Sabanci and Carrefour may decide to sell shares of CarrefourSA in the stock market to increase its free float from 3 percent, Dincer said.

DiaSA Exit

CarrefourSA, which has 28 hypermarkets and 215 supermarkets in Turkey, plans to open markets in big cities in the country in a move to cope with main rival Migros’s plan to open three stores a week, Dincer said. Migros aims to have 1,000 stores by the end of this year, chief executive Ozgur Tort said April 17.

Distribuidora Internacional de Alimentacion SA, the Spanish discounter spun off from Carrefour SA, and Sabanci agreed on April 19 to sell their supermarket joint venture, DiaSA of Turkey, to Yildiz Holding AS, operator of hard discounter Sok Marketler, for 320 million liras. Sabanci had a 40 percent stake in the discount retailer.

“The attractive Turkish market is increasingly in the hands of local companies as Carrefour has joined Dia in selling its local assets,” said Charles Allen, a senior retail industry analyst with Bloomberg Industries, in an analysis published today.

“This continues the strategy of divesting peripheral businesses, given success in international food retailing can be difficult to achieve without meaningful cross-border synergies,” Allen said.

CarrefourSA’s management may change after the expected completion of the takeover in June, Dincer said. Sabanci doesn’t plan to buy more of Carrefour’s remaining 46.2 percent stake in CarrefourSA, he said.

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