Reliance Beats Amazon, Swiggy & Udaan To Acquire Metro Cash & Carry For INR 4,500 Cr

SUMMARY

Metro aimed to sell its wholesale business for €1.5 Bn to €1.7 Bn but has reportedly settled for less than half of its asking price

Metro was looking for a buyer due to its poor financial performance over the years

The German-based wholesaler posted a loss of INR 67.37 Cr in FY21 while its turnover stood at INR 6,503.25 Cr

Reliance Industries has beaten tech giant Amazon and Indian startups Swiggy and Udaan, among others, in the race to acquire German wholesaler Metro’s Indian business, PTI reported.

The €500 Mn – €550 Mn (INR 4,000 Cr – INR 4,500 Cr) worth of deal will mark the exit of Metro Cash and Carry’s loss-ridden wholesale business from India after 19 years of operations.

As per reports, Metro Cash and Carry has 31 stores in India and had approached close to 10 companies to acquire its India operations. The company aimed to sell the business by September 2022, for a price between €1.5 Bn to €1.7 Bn but has reportedly settled for less than half of its asking price.

Metro Cash and Carry was incurring losses for years now except in FY18 when it reported net profit for the first time. According to filings accessed by Inc42, in FY21, the German-based wholesaler posted an INR 67.37 Cr net loss while its turnover stood at INR 6,503.25 Cr.

Understandably, the selling over of its Indian entity has come on the backdrop of poor financial performance.

Previously, Metro had decided not only to go with the highest bidder but also to seek regulatory approvals, check financial expectations and have its existing employees taken care of.

Reportedly, despite being in the running, Amazon, Udaan, Swiggy, Tata Group, D-Mart, Thailand’s conglomerate Charoen Pokphand (CP) and others, left the race and Reliance was the only contender left.

Reliance To The Save?

Reliance is already one of India’s largest phygital (physical+digital) grocers across the country. The salt-to-steel conglomerate sells groceries and other digital goods via its step-down subsidiary Reliance Retail and the JioMart business.

Most recently, it also acquired BigBazaar’s stores and rebranded them to Reliance Bazaar. While Reliance Fresh, Reliance Smart and Reliance Bazaar are walk-in stores for retail customers, Metro Cash and Carry’s customers include retailers, kirana stores, hotels, restaurants and caterers (HoReCa), corporates, SMEs, companies and institutions.

Thus, the acquisition is likely to make Reliance one of the largest organised retailers in terms of the store network, warehousing space, and frontend and backend capabilities.

The Metro warehousing space is also likely to give a fillip to Reliance’s JioMart initiative, benefitting local MSMEs with large warehousing capabilities within India’s $26.93 Bn worth of grocery market.

Reliance Industries subsidiary Reliance Retail Ventures Limited (RRVL) will reportedly be the holding company of the Metro Business as all the retail companies fall under RRVL.

RRVL reported a consolidated revenue of around INR 1,951.92 Cr in FY21 alongside a profit of INR 1,195.60 Cr.