METRO GROUP sells Makro UK to Booker Group Plc.

30 May 2012

  • Booker acquires all 30 wholesale stores and all operational assets of Makro UK in return for 9.99% of Booker's current issued share capital plus £ 15.8m cash payment
  • Combined business to improve choice, prices and services for wholesale customers
  • Strategic partnership to facilitate competence sharing between Booker and METRO GROUP

Booker Group Plc. and METRO GROUP announced today that they intend to combine METRO GROUP's UK wholesale business (Makro Self Service Wholesalers Ltd.) with Booker to form a strategic partnership in the UK market. Wellingborough-based Booker will acquire all 30 UK stores and all operational assets of Makro (Manchester). In return, Makro's German parent company METRO GROUP will receive 9.99% of Booker's current issued share capital (diluted stake of 9.08%) plus £ 15.8m in cash. The transaction, which is expected to be completed by the end of July, is subject to approval by Booker shareholders. Both companies expect to create additional value through strong competence sharing. 

"We see a perfect fit between both businesses as Booker focuses on caterers and independent retailers, while Makro, with its self-service wholesale, focuses on hotels and restaurants as well as small service companies," said Charles Wilson, CEO of Booker. "Together, we will be able to offer more choice at better prices, with perfectly tailored services to our customers. This will help us to become one of the UK's leading wholesalers to caterers, retailers and small- and medium-sized enterprises, with a full range of food and non-food." 

Olaf Koch, METRO GROUP's Chairman of the Management Board, added: "In Booker, we have found the right buyer for our challenging UK business, which has shown an unsatisfying performance. Booker is very well positioned in the UK market with a great brand perception and vast experience in managing product ranges and in customer services. Therefore we are convinced that this new setup meets all requirements for future success in the UK, while allowing METRO GROUP to further concentrate on countries within our strategic focus." 

The transaction - valued at £ 139.7m (based on the Booker closing share price of 79.1 pence on 29 May 2012) - will see LSE-listed Booker Group Plc. issue 9.99% of its current issued share capital (diluted stake of 9.08%) and additionally pay £ 15.8m in cash to METRO GROUP. To this end, Booker plans a capital increase and the issuance of these new shares to METRO GROUP. Given the current book value for Makro UK, METRO GROUP expects a negative non-cash impact on EBIT of around € 200m in Q2 2012, which has been caused by an unsatisfying performance of Makro UK. This earnings impact will be accounted for as a special item and will therefore have no effect on METRO GROUP's EBIT guidance for the full year 2012. 

METRO GROUP, the fourth largest retailer worldwide, plans to hold this stake beyond the lock-up period of 12 months, becoming a significant Booker shareholder with the aim of fostering a strategic partnership built on competence sharing to mutual benefit. The two companies will evaluate and explore other areas of co-operation such as assortments, buying, supply chain management, marketing, own brands and customer services within applicable laws. 

For the time being, Booker aims to keep the Makro brand. Booker also intends to develop a growth strategy for the self-service wholesaler. "We look forward to working with the people at Makro to jointly improve our services and offerings to retailers, caterers and small- and medium-sized businesses in the UK," said Wilson. "We are also looking forward to working with the team at METRO GROUP as strategic partners." 

In the financial year ending 30 March 2012, Booker Group reported sales of £ 3.9bn, with 172 wholesale stores in the UK and an average store size of 3,300 sqm and about 8,500 stock keeping units (SKUs) per store. Makro achieved sales of £ 766m in 2011, with 30 stores and an average store size of 9,060 sqm and 29,000 SKUs. Booker has 10,000 employees and Makro UK 3,000. 

METRO GROUP is one of the largest and most international retailing companies. In 2011, the Group posted sales of around € 67bn. The company has a headcount of some 280,000 employees and operates around 2,200 stores in 33 countries. The Group's performance is based on the strength of its sales brands which operate independently in their respective market segment: Metro/Makro Cash & Carry - the international leader in self-service wholesale, Real hypermarkets, Media Markt and Saturn - European market leader in consumer electronics retailing, and Galeria Kaufhof department stores. 

The Booker Group is one of the UK's leading food wholesalers with sales for the year ended 31 March 2011 of £3.9 billion. The Booker Group operates from 172 branches in the UK with a typical branch selling 8,500 stock keeping units. Bookers's customer base includes 338,000 caterers, 83,000 independent retailers and 60,000 SMEs (small and medium sized enterprises). Of the £3.9 billion sales, £1.1 billion is delivered to customers' premises and £2.8 billion is collected by customers from Booker's branches. Since 2005 Booker has been focusing, driving and broadening to become the UK's best supplier to caterers and retailers. Through improving choice, prices and services Booker has increased customer numbers by 75,000 and gross sales by £800 million since 2005. In recent years Booker has successfully acquired Blueheath, Classic and Ritter to improve customer satisfaction and deliver shareholder values.