Bloomberg News

Haniel to Cut Metro, Celesio Stakes in Debt Reduction Plan

November 27, 2012

Franz Haniel & Cie GmbH said it will reduce its stakes in Metro AG (MEO), Germany’s largest retailer, and drug wholesaler Celesio AG (CLS1) to reduce debt.

The closely-held German investment company will cut its holding in Metro to 30 percent from 34.2 percent, and its stake in Celesio to 50 percent from 54.6 percent, according to a statement today. Together, the stakes to be sold are worth about 400 million euros ($517 million) at today’s prices.

Haniel also plans to raise about 150 million euros by selling non-strategic assets to help reduce net borrowings to “well below” 2 billion euros.

“With this package of measures, Haniel is taking decisive action to reduce debt at holding level and to improve its portfolio balance,” the investment company said in the statement. “This will provide a solid platform for further growth and value generation at the Haniel Group.”

Reducing debt is Haniel’s biggest priority, the company’s chief executive officer said in April after reporting a 50 percent decline in earnings for last year.

“We know Haniel has been under pressure,” said Andrew Gwynn, an analyst at Exane BNP Paribas. Disposing of 4 percent of Metro “does remove some of the hangover risk. You can easily digest 4 percent in the market over 18 months.”

Stake Sales

Haniel said its supervisory board approved the sale of 4.24 percent of Metro over the next 18 months, representing about 13.7 million shares. That would be worth about 303 million euros, based on today’s closing price of 22.15 euros.

The Celesio sale will be conducted sooner, with about 7.9 million shares to be sold by way of a so-called accelerated bookbuilding to institutional investors. That’s worth about 99 million euros based on a price of 12.47 euros.

“We welcome that Haniel will remain a stable anchor investor,” said Jens Schreiber, a Celesio spokesman, by phone today. “For Celesio, this doesn’t change anything.”

A call to Metro’s press office wasn’t answered.

Metro last month reported a steeper drop in third-quarter earnings than analysts had predicted as Europe’s debt crisis crimped consumer spending. The miss was the latest blow to the retailer, which less than a month earlier had lowered its 2012 profit forecast to about 2 billion euros.

Haniel’s plan shows that “in the short term at least, a major shareholder would rather take the cash,” Bryan Roberts, an analyst at Kantar Retail, said in an e-mail.

Haniel’s investments also include scrap-metal trading unit ELG and business-to-business mail-order company Takkt AG. (TTK)

To contact the reporter on this story: Paul Jarvis in London at pjarvis@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net


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