METRO GROUP’s demerger is taking shape

5 September 2016

  • After a completed analysis phase: Management Board, with the approval of the Supervisory Board, will officially start preparations for the group's demerger
  • Proposals for supervisory board chairmen and management board positions
  • The groundwork for corporate and tax set-up as well as the capital structure was laid
  • Increase of capital stock not intended
  • Investment grade rating for both companies expected
  • Pro-forma organisational separation on 30 September
  • Split and public listing of both entities still planned for mid-2017

After the successful completion of the analysis phase, the planned demerger of METRO GROUP into two independent, strong and stock-listed retail companies is taking concrete shape: the necessary details with regard to corporate law, tax law and the respective capital structure of the two entities were clarified. Today, the Management Board of METRO AG, after completion of the reviews, has decided to start with the preparations required for a demerger of METRO GROUP. The Supervisory Board approved the plans on the occasion of an extraordinary meeting held on Monday. Effective from 30 September, the group will be split into two organisationally separate entities on a pro-forma basis.

"In the past months we have intensively analysed the planned split of our group into two strong and focussed trading companies", said Olaf Koch, Chairman of the Management Board of METRO AG. "Now, we are creating the first important prerequisites and will implement the according actions. With the organisational separation, we are taking the first major step towards creating a leading international Wholesale and Food Specialist as well as the European market leader for Consumer Electronics products and services. The developments of the past few months have confirmed our belief that these two entities with hardly any operational overlaps and synergies will be even more successful when operating independently".

Technically, the group split is achieved by spinning off and separate the Wholesale and Food business (METRO Cash & Carry and Real) as well as other related entities and business activities such as logistics, IT and real estate. The remaining group activities will essentially comprise the roughly 78% majority shareholding in Media-Saturn as well as other affiliated companies.

At the same time, the following key personnel decisions for both new entities are intended: Jürgen B. Steinemann is to retain his mandate as Chairman of the Supervisory Board of METRO AG for the future Wholesale and Food Specialist Group and Jürgen Fitschen, member of the Supervisory Board of METRO AG since 2008, is to assume the office of Chairman of the Supervisory Board of the future Consumer Electronics company. For the positions of Management Board of the Wholesale and Food Group following proposals have been made:

  • Chief Executive Officer (CEO): Olaf Koch, as already communicated
  • Chief Financial Officer (CFO): Christian Baier, currently CFO METRO Cash & Carry
  • Chief Operating Officer (COO): Pieter Boone, currently Member of the Management Board of METRO AG, responsible for METRO Cash & Carry
  • Chief Human Resources Officer (CHRO): Heiko Hutmacher, currently Member of the Management Board and CHRO of METRO AG

Following proposals have been made for the Management Board of the Consumer Electronics unit:

  • Chief Executive Officer (CEO): Pieter Haas, as already communicated
  • Chief Financial Officer (CFO): Mark Frese, currently Member of the Management Board and CFO of METRO AG
  • Chief Legal and Compliance Officer (CLCO): Dieter Haag Molkenteller, currently Group Director Legal Affairs & Compliance METRO AG

All Management Board positions have to be approved by the respective Supervisory Boards, the actual confirmation is under the usual reserve of the annual general meeting or relevant supervisory board.

In parallel, METRO GROUP defined the business strategies for the two future entities and also developed clear capital and tax structures for them. The demerger concept was already aligned with the tax authorities. It is expected, that both groups will maintain the "investment grade" rating. An increase in the capital stock of METRO AG is not planned. To strengthen the capital base of the Consumer Electronics company, a 10% shareholding in the Wholesale and Food business is envisaged. In the same way, almost all existing financial liabilities of the group are to be assumed by the Wholesale and Food company. "The new capital structure will give both entities the necessary stability and scope for further growth. Both companies will be endowed with sufficient liquidity", said Olaf Koch.

In late March 2016, the Management Board of METRO AG had announced that it would examine a split of the group into a Wholesale and Food Specialist company and a company focused on Consumer Electronics products and services as the logical next step in the transformation of the group. Both companies are to be managed as separately listed stock corporations with their own distinct profile, management and Supervisory Boards. The underlying conviction is that, by focussing on their respective industry and customer segment, both companies will be able to develop larger growth perspectives. Both companies stay based in Düsseldorf.

 

METRO GROUP is one of the most important international retailing companies. It generated sales of some €59 billion in financial year 2014/15. The company operates over 2,000 locations in 29 countries and employs more than 220,000 people. The performance of METRO GROUP is based on the strength of its sales brands, which act independently on the market: METRO/MAKRO, the international leader in the self-service wholesale trade; Media Markt and Saturn, the European market leader in consumer electronics retailing; and Real hypermarkets.