Koç Holding: Migros Türk sale in ‘last stage’
Posted by meb at February 12th, 2008
Koç Holding said it is in the ‘last stage’ of selling Migros Türk, Turkey’s largest supermarket chain, in what may be the country’s biggest private-equity takeover. No agreement on a sale has yet been reached, Koç said yesterday in a statement, without providing further details. Blackstone Group LP, a New York-based private equity firm, and Croatian food company Agrokor d.d. lead the race to buy Migros Turk with a bid of $3.2 billion after a drop in the retailer’s share price this year, Croatia’s Business.hr magazine reported on Feb. 8. Blackstone spokeswoman Sophia Harrison declined to comment and Agrokor’s Anja Linic wasn’t immediately available. “The fact that Koç did not deny Agrokor as buyer and a $3.2 billion offer makes me think they will close the deal around that level,” said Mehmet İlgen, a trader at Ata Invest in Istanbul.
Koç, whose products range from appliances to cars, acquired Migros Türk in 1975 and is selling the retailer as it seeks to reduce debt after buying Turkey’s state oil refiner for $4.1 billion in 2006. Migros Türk was founded in 1954 as a joint venture between Switzerland’s Migros Cooperatives Association and the Istanbul Municipality to help develop a modern retail network in the city, according to the company’s Web site. Migros Türk rose 1.1 percent, to YTL 19.30 at 2:20 p.m. in Istanbul trading yesterday, valuing the company at about $2.8 billion. The company was worth $3.3 billion on Dec. 28, when the shares rose to a record. Since then, Turkey’s benchmark stock index has plunged 26 percent.
Foreign investment
Koç Holding advanced for the first time in five days, rising 1.9 percent to YTL 4.34. Both shares were suspended earlier yesterday pending the statement from Koç. Turkey has attracted about $40 billion of direct foreign investment in the past two years. Retailers from Carrefour SA to Britain’s Tesco Plc have opened stores in the country to tap economic growth that has averaged 6.9 percent annually since 2002, helping to double per capita income to about $6,900. Turkey has 17 supermarkets per million people, compared with 150 in the European Union, consulting firm PricewaterhouseCoopers LLP has said. Sales reached $137 billion in 2006, about 40 percent of which was registered and taxed by the government, according to the Turkish Council of Shopping Centers & Retailers. The other 60 percent consists of street vendors and corner shops. Market leader Migros Türk controls less than 10 percent of the country’s grocery sales, securities firm TEB Invest says. The retailer runs more than 960 stores, and had a profit of YTL 61.8 million ($50 million) in the third quarter of last year on sales of YTL 1.22 billion. Koç received offers from buyout firms Kohlberg Kravis Roberts & Co. and BC Partners as well as the Blackstone-Agrokor bid, Reuters reported last month, without saying where it got the information. Koc said in June it hired JPMorgan Chase & Co. to seek offers for 51 percent of the retailer. KKR holds the record for the biggest private equity acquisition in Turkey, with its $1.3 billion purchase of shipping company U.N. Ro-Ro in October.
Source: Turkish Daily News
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