Reliance Retail bids Rs 5,600 crore as initial offer to acquire Metro Cash & Carry India: Report

As per news source, in order to acquire Metro Cash and Carry’s India operations and assets Reliance Retail has submitted a non-binding bid of Rs 5,600 crore.

The source also reported that Charoen Pokphand (CP) Group of Thailand has submitted a bid of about Rs 8,000 crore or $1 billion and it almost matches the German wholesaler’s expectations.

In Bengaluru, Metro India has briefed the senior teams from both the bidding companies on the performance and growth potential in presence of merchant bankers, according to three industry executives aware of the development told the news source.

"Our company evaluates various opportunities on an ongoing basis. We have made and will continue to make necessary disclosures in compliance with our obligations under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and our agreements with the stock exchanges," a Reliance spokesperson told the news source. He also said that as a policy, it will not comment on media speculation and rumours.

One of the persons aware of the development told the news source that Metro AG is concerned about the regulatory environment in India and the ‘swadeshi versus videshi’ debate.

Lobby groups representing Indian retail companies have upped the ante against overseas retailers, alleging violation of foreign direct investment (FDI) norms, which the foreign companies have always denied.

“Against this background, Reliance has an edge over others because it is the only Indian company serious about buying Metro India. Thailand’s CP Group is also hugely interested because it already has a presence in India through Lots Wholesale outlets,” the news source reported, quoting one of the persons mentioned above.

merchant bankers of Metro Cash and Carry India are JP Morgan and Goldman Sachs and they valued the business at about $1 billion. Final binding bids are likely to be submitted within a month, during which, according to some industry experts, the bid amount could change.

The report also says that in FY21 Metro Cash and Carry India clocked sales of Rs 6,738.3 crore. It is a growth of 4 per cent over the previous year.

One of the executives told the news source that Metro owns seven out of its 31 wholesale stores in India. Apart from seven stores others are on lease. "These land parcels are expected to improve its valuation from initial estimates," he said.