Czech investor Daniel Kretinsky is preparing a potential bid for Metro, people close the matter said.
Global Commerce (EPGC), a vehicle co-owned by Kretinsky and Slovak investor Patrik Tkac, is expected to have the financing and other arrangements in place to be able to announce a tender offer for Metro as early as March, the people added.
Kretinsky, the main owner and CEO of Czech power group EPH and a shareholder in France's Le Monde newspaper, and Tkac already own a roughly 10 percent stake in Metro, which has a total market value of about €5.2 billion ($5.9 billion).
EPGC and Metro declined to comment.
Negotiations With Banks
EPGC is negotiating with banks and credit funds, and the talks are not just focused on the Metro deal, but also include the firm's other investments, one of the people said.
Kretinsky and Tkac are also in talks with other Metro shareholders, and progress in these discussions could affect the timing of any transaction, the person added.
No final decision has been taken on whether to go ahead with the full offer for Metro, the people said.
Kretinsky and Tkac bought their stake in Metro last year, as well as options for more shares that would take their stake to either just below or just above 30%. The options expire in June, but can be extended by three months.
Passing the 30% threshold would trigger a mandatory offer for the whole company, according to German law, but Kretinsky and Tkac could opt to launch a voluntary offer.
Investment Strategy
The Metro investment is part of Kretinsky's strategy to diversify his holdings, which also include the Czech Republic's top-selling tabloid Blesk, into his target sectors of food and retail.
Metro has been refocusing on its core cash-and-carry business, selling its Kaufhof department stores and splitting from electronics group Ceconomy. It has put its struggling Real hypermarket chain on the block and attracted interest from private equity groups such as Cerberus and Apollo.
Metro's share price tumbled last year when it cut its profit forecast due to poor performance at its Russian operations.
Earlier this week, Metro said that in its fiscal first quarter, which covers the Christmas period, it saw the fastest like-for-like sales in 18 months, and that it had curbed the decline in its struggling Russian business.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
