B2B Ecommerce Unicorn Udaan Joins The Race To Acquire Metro Cash & Carry

B2B ecommerce unicorn Udaan has reportedly expressed interest in buying Metro AG’s India wholesale unit. With this, the startup joins the likes of deep-pocketed suitors such as Tata, Amazon, DMart and Reliance. Thailand’s Charoen Pokphand Group and foodtech giant Swiggy too are keen to get the loss-ridden Metro Cash & Carry business.

As per reports, Metro Cash & Carry has 31 stores in India and has approached close to 10 companies to acquire its India operations for a price between $1.5 Bn to $1.7 Bn. It is expected to sell the India unit by the end of September 2022.

According to RoC filings, Metro Cash & Carry posted a loss of INR 23.33 Cr, against a turnover of INR 6,915.3 in FY20. In FY19, it posted a top line of INR 6,553 Cr and a profit for the first time (since it began operations in 2003) of INR 217.4 Cr. 

Financial details for FY21 and FY22 are still not available.

But since it has consistently had poor financial performance, Metro AG decided to sell its Indian business Metro Cash & Carry. While several top businesses have bid their own numbers for the German-headquartered company, the final decision on who wins the bid to take control of the company’s operations in India will be taken in Germany. 

It is also still unclear if Metro AG will keep a minority stake in the operations, which will be decided based on the new owner’s needs. Metro will reportedly not only base its decision on the highest bidder but also seek regulatory approvals, check financial expectations and wants its existing employees taken care of.

What Do The Bidders Want With Metro Cash & Carry?

What each bidder wants to do with Metro AG’s Indian wholesale business unit depends on their existing pedagogy. For instance, by acquiring Metro Cash & Carry, Swiggy is looking to create a hub-and-spoke model where Metro’s wholesale stores will supply goods to Instamart stores that will further be delivered to customers’ doorstep or sold in the stores.

Reliance Industries, which is one of the largest offline retailers in the country is looking to expand its operating retail stores as dark stores across grocery, fashion, footwear and electronics segments, while the large Metro space may be converted into offline stores. 

As Amazon expands its Pantry business, Metro’s retail stores and its links with FMCG companies will help the company stay ahead of its rising rival Flipkart, JioMart and even DMart.

As for Udaan, what the move entails is still unanswered. The startup, launched in 2016 by ex-Flipkart executives Sujeet Kumar, Vaibhav Gupta and Amod Malviya, connects SMBs, manufacturers, wholesalers, traders and retailers to sell goods and other services. What Metro does offline, Udaan nearly replicates within its online business model.

The startup’s plans to pump $1 Bn+ in Metro’s acquisition comes at a time when Udaan has joined the long list of Indian startups resorting to layoffs to cut costs amid the market conditions. 

Only six months ago, Udaan had raised $250 Mn in a convertible note round from investors such as Microsoft, M&G Prudential, Kaiser Permanente, Nomura, TOR, Arena Investors, Samena Capital and Ishana Capital.

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