International giants like Auchan and Carrefour are looking for acquisition targets, while other names are mentioned in connection with takeover talks.
“Auchan is looking for acquisitions after having missed the start in the Billa takeover race,” a market source said several months ago.
The 86-supermarket chain Billa eventually went to Carrefour at the end of last year after more than a year of negotiations. Mega Image and an investment fund had competed in the race for Billa, the smallest modern retailer in Romania, with more than EUR300 million revenue a year, but dropped out over price disagreements.
Other retailers on the market are subject to takeover talks because they are too small to have a chance at the top three. Current market leader is German-held hypermarket chain Kaufland, whose more than 100 stores generated EUR1.8 billion sales in 2014, according to the latest data available. Last year’s sales came close to EUR2 billion, according to ZF estimates.
Second leading retailer is Carrefour, which might grow to EUR1.6 billion to EUR1.7 billion sales, following Billa takeover, according to ZF estimates. The deal has yet to be approved by the Competition Council.
Analysts and market actors say no new names are planning to enter Romania, so any moves that will be made will only involve existing retailers.
“Auchan and Carrefour are the retailers with the biggest appetite for acquisitions. They are vying for the top spot and cannot get it without takeovers. We could also see an acquisition by the Delhaize-Ahold group, Mega Image’s owner,” another market source said.
Belgium’s Delhaize merged with Netherlands’ Ahold last year, creating a giant. The new entity has not announced plans for Romania or other markets yet. If it sees Romania as a strategic market, it might continue to implement the plans announced by the Mega Image officials. Former Mega Image chief executive, Xavier Piesvaux, said the retailer would go shopping to expand throughout the country instead of staying in one region as it does now, when 80% of its stores are in Bucharest and in the surrounding area.
A potential target would be Profi, which has about 370 stores throughout the country and a similar store format. Profi’s owner is a private equity fund, which will be looking for an exit in the coming years. Profi officials said it might be a sale or a floatation, but only after 2017. Mega Image, Carrefour and Auchan should compete for Profi.
In case Mega Image’s owner decides Romania is not a strategic market, the retailer may end up acquired by Auchan and Carrefour. Carrefour would consolidate its position on the small store format, while Auchan would expand into a new market by adding this format to its operations.
A few years ago Profi was said to acquire Penny Market, when both were operating on the discount store segment. Profi has since repositioned to the supermarket segment and the deal was not closed.
“Germany’s Rewe group sold Billa in Romania and kept Penny Market, which it announced was a strategic asset, but I am not convinced of that. We shall see what this network will do in a year or two, which promised fast-paced expansion by 20 stores a year and has yet to deliver,” a market source said.
If Penny Market were to be acquired, the market would need a new actor, because the only other discount store chain is Lidl, and the competition watchdog would not allow a merger of the two.
“I don’t know any other discount retailer wanting to come. Aldi (one of the largest discount retailers in the world besides Lidl i.e.) definitely has no plans for Romania,” an industry executive said.
Also for sale are the Cora hypermarkets and the four remaining Real hypermarkets. Cora owners are willing to sell either the entire local network or separate stores while Real’s owner Metro has yet to find a buyer.
(English version by Loredana Fratila-Cristescu)