August 27, 2018 / 6:21 AM / 5 months ago

Metro soars on shake-up of shareholder structure

BERLIN (Reuters) - Shares in Metro AG (B4B.DE) jumped on Monday as Ceconomy (CECG.DE) announced it may join family-owned Haniel [FHANI.UL] in selling a stake in the German retailer to an investor group led by Czech billionaire Daniel Kretinsky.

German retailer Metro AG sign is seen on the steps of their headquarters in Duesseldorf, Germany March 02, 2018. REUTERS/Thilo Schmuelgen

Ceconomy, the consumer electronics retailer that split off from Metro last year, said on Monday it was in talks to sell most of its 10 percent stake in Metro to investor group EP Investment, represented by Kretinsky.

Metro shares were up 17 percent on Germany’s mid-cap index .MDAXI at 0741 GMT, heading for the biggest one-day gain ever, while Ceconomy was up 4.7 percent.

Chief Executive Olaf Koch has sought to focus on the once sprawling conglomerate’s core cash-and-carry business in recent years, selling its Kaufhof department stores and then splitting from Ceconomy.

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

Metro, which runs almost 300 stores in eastern Europe, said this month it hoped its shrinking business in Russia had turned a corner despite a quarterly drop in profit and sales.

However, shareholders, including the Haniel family, have expressed their dissatisfaction with Koch.

Germany’s Manager Magazin monthly last week reported they were looking for a replacement for Koch although his contract runs until March 2022.

Regarding its Metro stake, Ceconomy said key terms such as acquisition structure and price are still being discussed. It said no decision had yet been taken on whether a sale would take place and also that in any event it would retain a stake of around 1 percent for tax reasons.

Investment group Haniel [FHANI.UL] said on Friday that it had agreed to sell a 7.3 percent stake in Metro to an investment vehicle of Kretinsky and Slovak investor Patrik Tkac for an undisclosed sum.

Under the terms of the deal, they can acquire Haniel’s remaining 15.2 percent stake under a call option.

Haniel is Metro’s largest shareholder with 22.5 percent, which was worth 977 million euros ($1.12 billion) at Friday’s closing price. Ceconomy owns around 10 percent.

Reporting by Maria Sheahan and Emma Thomasson; editing by Louise Heavens and Jason Neely

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