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Deals

Three bids submitted for Turkish Migros: sources

LONDON/ISTANBUL (Reuters) - Three bidders have submitted offers for Turkey's Migros MIGRS.IS with at least two of the bids below the supermarket chain's current market value, sources familiar with the situation said on Wednesday.

Migros owner and Turkey's largest company, the conglomerate Koc Holding KCHOL.IS, said in a statement to the stock market earlier on Wednesday that its advisor JP Morgan had informed it of bids and that talks with bidders were continuing.

Private equity firm Kohlberg Kravis Roberts & Co LP (KKR) KKR.UL bid alone; BC Partners and Turkish private equity group Turkven submitted a joint offer, while Croatian food group Agrokor bid with private equity firm Blackstone BX.N, the sources said.

One of the sources said private equity firm Bain Capital was also part of the BC-Turkven grouping.

BC, Turkven and KKR declined to comment. No one was immediately available to comment at Blackstone and a Bain spokesman had no immediate comment.

There was also no comment from Croatian Agrokor, a food and retail firm with interests in Serbia and Hungary, which has grown into a regional company with annual revenues of $3 billion from a small flower trading firm.

The sources said at least two bids valued Migros below its market capitalization.

“It’s unrealistic to expect bids at or above market value,” one of the sources said, in comments echoed by the other source.

Migros’s market value stood at $3.36 billion at the close on Tuesday but the shares fell in line with a declining Istanbul market on Wednesday, weakening 2.7 percent in lira terms to take its market cap to $3.21 billion.

The stock rose 13 percent last year after family-run Koc Holding said it was looking to sell Migros, but lost 10 percent early last week on news France's Carrefour CARR.PA and Turkish conglomerate Sabanci Holding SAHOL.IS pulled out of the bidding.

That left Croatia’s Agrokor as the only strategic bidder, sources said, raising concerns that financial bidders would bid less aggressively.

Also, Turkish law does not allow minority shareholders to be squeezed out after tender calls, making it difficult to take a firm private, as private equity companies tend to want.

The stock recovered some ground at the end of last week, on news that Agrokor was in talks with Blackstone, and on press speculation that a bid could value the firm as high as $4 billion and that Wal-Mart WMT.N could bid.

A separate source familiar with the situation said Wal-Mart had never been part of the process.

Koc, the largest company in fast-growing EU candidate Turkey, is selling a 51 percent stake in Migros to concentrate on four core businesses: autos, energy, finance and consumer durables.

Analysts note that retail has a lower operating profit margin and return on equity than Koc Holding overall: according to nine-month results Migros saw a 18.6 percent return on equity compared to 29.4 percent for the group overall.

Reporting by Eleanor Wason and Emma Ross-Thomas; editing by Elaine Hardcastle

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