Czech investor tightens grip on Metro with additional stake

BERLIN (Reuters) - Czech investor Daniel Kretinsky is buying more shares in German retailer Metro B4B.DE from Ceconomy CECG.DE, the companies said on Thursday, likely stoking speculation of a full bid.

FILE PHOTO: German retailer Metro AG sign is seen on the headquarters in Duesseldorf, Germany March 02, 2018. REUTERS/Thilo Schmuelgen/File Photo

Metro, whose shares are down a third so far this year, has been refocusing on its core cash-and-carry business, selling its Kaufhof department stores and splitting from electronics chain Ceconomy last year - which retained a 10 percent stake.

Ceconomy said EP Global Commerce (EPGC), co-owned by Kretinsky and Slovak investor Patrik Tkac, is buying a 9 percent stake from it in two steps, 3.6 percent initially, with a put option for the rest, expected to be exercised in nine months.

The parties did not disclose the purchase price.

In August EPGC agreed to buy another Metro stake from investment firm Haniel. Metro shares jumped at the time as Ceconomy said it may also sell a stake.

If the Czech and Slovak investors exercise an option to buy the full Haniel stake offered, then EPGC could end up with 31.5 percent of Metro, above the 30 percent threshold that would require them to bid for the whole company.

EPGC said in a statement that the investors had flexibility to increase their stake in Metro to 30 percent, or to stay below that level.

Ceconomy shares ended the day down 3.7 percent, the biggest decliners among German midcap stocks .MDAXI. Shares in Metro closed 0.7 percent lower.

“This significant investment reflects their strong interest in the future development of Metro as responsible long-term oriented investors, with the goal to contribute to a positive development of Metro,” EPGC said.

Metro’s share price tumbled in April when it cut its outlook due to poor performance at its Russian operations, forcing Ceconomy to take impairments on its stake.

Olaf Koch, Metro’s chief executive since 2012, is undergoing a strategic overhaul to shrink the once sprawling conglomerate and improve its performance.

Metro said last week that it plans to sell its struggling Real hypermarket chain.

“Metro is on track to implement its strategic agenda which is focused on value creation and believes that it is in the best interest of the group and all stakeholders,” a Metro spokesman said. It is looking forward to the talks with EPGC, he added.

Kretinsky is the majority owner and CEO of power and infrastructure group EPH, which owns power plants across Europe. He also owns media, including the Czech Republic’s top-selling tabloid, Blesk.

Additional reporting by Jason Hovet, Matthias Inverardi and Christoph Steitz; Editing by Elaine Hardcastle