After a long back and forth, Metro AG managed to sell Real to a financial investor. The supermarket chain is in danger of being broken up. The 34,000 employees are now worried about their jobs.
After tough and long efforts, the retail group Metro has agreed with the financial investor SCP on the sale of its ailing supermarket chain Real. It was agreed on a 100 percent takeover, it says in a joint message from both companies. According to this, a large part of the Real locations should “continue to operate in the long term, either under the Real brand or through other retailers”.
Now the supervisory body of the Russian Sistema PJSFC has to approve, which ensures the financing of the takeover. Sistema announced in Moscow that it would make available up to 263 million euros. Metro speaks in its own announcement of an expected net cash inflow of EUR 0.3 billion. That is around 200 million euros less than was hoped a few months ago. The transaction also requires the approval of the antitrust authorities.
Markets should be sold or split
With the contract, the supermarket chain with 276 real stores, 34,000 employees, 80 properties and the online shop real.de is effectively on the verge of being broken up. SCP announced that the majority of today’s real markets should be sold or split to other retailers. A core of around 50 Real stores will continue to operate under the Real brand for 24 months. So far, according to the announcement, SCP assumes that around 30 locations will be closed.
The supermarket chain was recently the problem child of Metro and had caused deep red numbers in the 2018/19 financial year. The hypermarkets, which are mostly on the green field, have suffered from the changing shopping habits in Germany for years. More and more, customers left the hypermarkets aside and preferred to buy in supermarkets and discounters in their neighborhoods.
Are the “big four” buying real markets now?
The Metro had already announced in 2018 that it would sell the supermarket chain so that it could concentrate entirely on the wholesale business with restaurateurs and small retailers. But the sales process turned out to be much more difficult than expected. Exclusive negotiations with the real estate investor Redos, which started with high hopes, failed. An agreement was only reached in the second attempt.
The sales efforts were made difficult not least by the high concentration in the German food trade. Edeka, Rewe, Aldi and the Schwarz group with their discounter Lidl dominate the German market so much that the planned resale of numerous real markets to the “big four” is viewed with concern by the competition watchdogs.