“Any opportunity on the supermarket segment is carefully considered and reviewed by our company,” says Adrian Nicolaescu, marketing director with Mega Image, without providing further details.
Billa officials deny the information, saying there are no plans to sell Billa Romania for the time being and that the company is constantly reviewing each market separately. The evaluation of the markets where Billa operates is part of the business routine of the company without it meaning a decision will be made about the respective operations. The same goes for Billa Romania, said Theresa Teufel, communications manager with Rewe International AG group, which owns both Billa supermarkets and discount store chains Penny Market and XXL Mega Discount in Romania.
The information about the sale of Billa supermarkets in Romania first surfaced this summer, when Rewe announced it would sell all its stores in Italy, thus exiting that market. It also said it would focus only on the markets where it was a top player. Billa is the smallest modern retail chain in Romania, in a sector that numbers 12 networks. It is far from the top retailers, Kaufland, Carrefour, Metro and Auchan, each of which with more than 4.5 billion lei (EUR1 billion) revenue. Billa Romania has about 85 supermarkets, which generated RON1.35 billion revenue last year.
Early this year, the Billa Romania representatives announced they would continue expansion and open ten stores, at the same pace as in the last few years. So far, the company has opened only half of the planned supermarkets.
Rivals Mega Image and Profi have much larger networks, more than 360 stores and more than 260 respectively. Carrefour, too, operates supermarkets under the Market brand and has as many as Billa.
A takeover of Billa Romania by Mega Image would be a surprise move considering the latter has focused on Bucharest and the surrounding area so far, where it opened more than 80% of its stores. Billa, on the other hand, chose to go to both big and medium-sized cities throughout the country.
Moreover, Mega Image’s general manager Xavier Piesvaux has recently said that the company will maintain its focus on Bucharest, as in Romania it is positioned at the middle of the ranking of modern retail by revenue. Thus, it would be very difficult for the company to climb in the ranking led by Kaufland, Metro Cash & Carry, Carrefour and Auchan, each with over EUR1 billion in revenue.
Mega Image has barely overshot the EUR500 million revenue mark. Unlike its rivals, Mega Image supermarkets usually cover 500 square meters while a convenience store covers 100 square meters on average, according to ZF estimates. Its rivals operate larger stores.
Billa acquisition and the expansion in the past year would bring Mega Image close to the EUR1 billion revenue threshold, according to ZF estimates.
Mega Image expands organically and by making acquisitions. It has already bought networks like Angst, Gmarket, La Fourmi, Primavara and Prodas, as well as part of the Lucas stores in Brasov. The Billa takeover would only complement the acquisitions in the past few years and would also be its biggest.
“The takeover of Billa by Mega Image would be a surprising move especially because it would dilute their business model since they have been focusing on Bucharest and the counties on a 250 kilometer radius so far,” a source close to the company said. “Still, only such a takeover would give them national coverage.”
(English version by Loredana Fratila-Cristescu)