U.S. Markets close in 5 hrs 23 mins

Metro's $1.5 Billion China Sale Draws Tencent, Citic PE Interest

Vinicy Chan and Manuel Baigorri
1 / 2

Metro's $1.5 Billion China Sale Draws Tencent, Citic PE Interest

Metro's $1.5 Billion China Sale Draws Tencent, Citic PE Interest

(Bloomberg) -- German food wholesaler Metro AG’s Chinese business has attracted potential bidders including internet giant Tencent Holdings Ltd. and domestic buyout firm Citic Private Equity, people with knowledge of the matter said.

Metro kicked off its sale of a controlling stake in the Chinese unit this month and first-round offers are expected to be submitted in April, according to the people, who asked not to be identified because the information is private. The business, which could fetch at least $1.5 billion, has also drawn interest from local supermarket operator Yonghui Superstores Co., the people said.

The German retailer is willing to sell as much as 80 percent of the Chinese business while retaining a significant minority if an attractive offer is made, Bloomberg News reported last month. Deliberations about a potential deal are at an early stage, and there’s no certainty the potential bidders will proceed to submit offers, the people said.

Metro’s Cash & Carry business in China spans 95 stores and reported revenue of 2.7 billion euros ($3.1 billion) in the 2017-2018 financial year, according to its website. The company picked Citigroup Inc. and JPMorgan Chase & Co. to run a review of its Chinese business, people with knowledge of the matter said last year.

Metro is in talks to potential partners about opportunities for the future of its China business and is exchanging information with them, the company said in an emailed statement Wednesday. The company said it won’t comment on the status of the process.

Yonghui Superstores has held preliminary talks with Metro but made no agreement on the potential purchase, it said in a filing to Shanghai stock exchange. A spokeswoman for Tencent declined to comment. Calls to Citic Private Equity’s Hong Kong and Beijing offices weren’t answered. Reuters reported Tuesday that Metro had kicked off the sale, citing unidentified people.

Metro joins other multinational consumer groups in rejigging its China business. McDonald’s Corp. sold control of its China and Hong Kong operations to an investor group including state-backed conglomerate Citic Ltd. for about $1.7 billion in 2017. Yum! Brands Inc., the operator of KFC and Pizza Hut restaurants, carved out its Chinese operations into a separately-listed company in 2016.

Yonghui, partially owned by Tencent, operates close to 900 supermarkets in China, according to its website. Tencent last year invested in Carrefour SA’s China unit, following rival Alibaba Group Holding Ltd.’s attempts to uproot traditional stores with technology.

(Updates with Yonghui statement in sixth paragraph.)

--With assistance from Lulu Yilun Chen, Rachel Chang, Carol Zhong, Cathy Chan, Richard Weiss and Simon Lee.

To contact the reporters on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net;Manuel Baigorri in Hong Kong at mbaigorri@bloomberg.net

To contact the editors responsible for this story: Fion Li at fli59@bloomberg.net, Ben Scent, Ryan Lovdahl

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.