Metro Group has denied reports that it is in talks to sell its Real hypermarket chain in Romania to Tesco.
According to Romanian international daily Ziarul Financiar, the two sides are negotiating a sale of Metro’s 24 Real stores in the country.
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However, a spokesperson for Metro told just-food today (13 December) that there was “no truth in the rumours” and that it had no plans to sell its Real chain. Tesco declined to comment on the reports.
At the end of September, Metro had over 430 Real hypermarkets across six markets. In 2009, sales from Metro’s Real stores declined by 2.9% to EUR11.3bn (US$15bn).
RBS retail analyst Justin Scarborough said that while the reports are “somewhat off the mark”, the story may give the Metro share price “a little boost” today following an 8% decline last week.
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He added: “One could not rule out an entry into Romania by Tesco at some stage as its characteristics are pretty positive (a large market, modern grocery development and fragmented) but Tesco isn’t going to enter the market by buying Real’s operations.
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By GlobalData“Indeed, from a financial perspective, we estimate that in order to achieve a year three post-tax ROIC of just 7%, that Tesco would have to achieve a 9% EBIT margin on year three sales of EUR900m (a 10% CAGR sales growth rate post deal),” Scarborough said.
Metro shares rose 1.7% to EUR54.84 at 14.31 GMT in trading today.
