Reliance Retail Ventures Ltd (RRVL) has acquired all Indian assets of German food wholesaler Metro AG, including 31 wholesale stores and six properties, for ?0.3 billion (?2,700 crore). The sale, which resulted in an EBITDA gain of ?150 million (?1,345 crore) for Metro AG, aligns with the latter's long-term growth strategy. All stores will retain the Metro brand during the agreed transition period. This significant acquisition bolsters Reliance Retail's footprint in the Indian market.
German food wholesaler, Metro AG, has successfully concluded the divestment of its entire India-based business, including its 31 wholesale outlets and six real estate holdings, to Reliance Retail Ventures Ltd (RRVL). The equity valuation for the transaction was pegged at approximately ?0.3 billion (?2,700 crore).
The transaction, according to Metro AG, has resulted in an Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) gain of around ?150 million (approximately ?1,345 crore), with cash proceeds totalling ?0.3 billion. Steffen Greubel, CEO of Metro AG, expressed confidence in Reliance Retail's capability to steer the future trajectory of the Indian operations, leveraging their local market expertise.
Metro AG stated that this strategic divestment aligns with its longer-term growth objectives and will substantially contribute towards reducing its net debt. This reduction will be in addition to the debt cut realized in the first quarter of the current fiscal year when the Indian operations were reclassified.
While the ownership of the Indian operations has transferred to Reliance Retail, all the existing outlets will continue to function under the Metro brand for a mutually agreed transition period. Both Metro AG and Reliance Retail have assured that there will be no immediate changes for the employees and customers of these outlets.
In conclusion, this move marks a significant strategic shift for both companies. Reliance Retail, with this acquisition, strengthens its retail footprint in India, leveraging Metro AG's established network. On the other hand, Metro AG, by divesting its Indian operations, frees up resources to focus on its mid and long-term growth strategies, thus maintaining its momentum in other markets.
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