Bloomberg News

Anadolu Said to Weigh Buying Into Merged Tesco-Migros

March 26, 2014

Customers are seen at a Migros Supermarket in Istanbul

Customers are seen at the checkout of a Migros supermarket located in the Metro City Mall, in Istanbul. Photographer: Staton R. Winter/Bloomberg

Anadolu Endustri Holding AS is considering buying a stake in a combination of Tesco Plc’s Turkish operations and Migros stores as the company looks to expand beyond beverages, said people familiar with the matter.

Such a purchase would provide a way for BC Partners Holdings Ltd. to begin to exit its Migros investment, which it acquired in 2008 for about $3.3 billion, said the people, who declined to be identified as the matter is confidential. There’s no guarantee a deal will be reached and BC Partners hasn’t ruled out other options, one of the people said.

Shares in Migros Ticaret AS and Tesco’s Turkish unit both surged in Istanbul. Anadolu, which owns stakes in Turkey’s biggest brewer and in Coca-Cola Co. (KO:US)’s local drinks business, is “assessing business opportunities” in the retail industry, parent company Yazicilar Holding AS said today in a statement. Representatives for Tesco and BC Partners declined to comment.

Anadolu has struggled in the past year as revenue from selling beer in Turkey and Russia has slumped. Buying into a combined retailer would give it access to outlets in a country of about 80 million people.

“There is nothing yet to announce to the public, but should there be developments they will be announced in line with regulations,” Yazicilar said in a filing to Borsa Istanbul.

Tesco Retreat

Migros rose 5.4 percent to 16.70 liras in Istanbul, the highest price since Dec. 16. Tesco Kipa gained 12 percent to 4.59 liras, while shares of its parent company rose as much as 1.6 percent to 298.35 pence in London. Yazicilar Holding rose 1.8 percent to 17.3 liras.

Tesco Kipa said last month it had started talks about the future of its business following reports that the parent was seeking a combination with Migros, the nation’s second-biggest retailer. Such a move would mirror one that Tesco struck in China last year with China Resources Enterprise Ltd.

The U.K. grocer also has exited the U.S. and is under pressure to reduce its exposure to other international markets as Chief Executive Officer Philip Clarke seeks to revive sales in Britain, which accounts for about two-thirds of revenue. Turkey, which Tesco entered in 2003, was one of the retailer’s worst-performing markets last year as the business lost ground to discounters like BIM Birlesik Magazalar AS. Tesco generates about 745 million pounds ($1.2 billion) of revenue in Turkey.

BC Partners, based in London, in 2008 acquired control of Migros from Koc Holding AS in what was then Turkey’s biggest takeover by a leveraged-buyout firm, giving the private-equity firm access to close to 1,000 stores in Turkey and neighboring countries at the time. The company last year hired JPMorgan Chase & Co (JPM:US). and Bank of America (BAC:US) Corp. to review options such as a sale of its stake in Migros.

To contact the reporters on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net; Dinesh Nair in Dubai at dnair5@bloomberg.net; Kiel Porter in London at kporter17@bloomberg.net

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net; Celeste Perri at cperri@bloomberg.net; Benedikt Kammel at bkammel@bloomberg.net


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