Attentio, Shoppers: Europe's Stores Are in Play
From TWSJ 3/8 by Jason Singer.
The future of the world's second largest retailer, Carrefour SA is in flux. Is the Paris-based supermarket chain, which is second only to WalMart Stores Inc. in global sales, in play? Carrefour has stores in 29 countries, but none in the U.S.
Taking retailers like Carrefour private can be attractive to private investors for several reasons. Private-equity firms can hire new managers, pay them lavishly, and direct them to make sweeping changes quickly - the kind of moves than can depress quarterly earnings at first but can become profitable later on. It can be difficult for public companies to make such moves.
Sainsbury's, the third largest supermarket operator in the U.K., after Tesco PLC and Asda, has been winning new customers after several years of sales declines by focusing on service and high-quality foods. Germany's Metro Group AG, Dutch retailer Royal Ahold NV, and Belgiums's Delhaize Group NV, have also been the subjects of takeover talk. All would have price tags of $10 billion and up.
Wal-Mart's British unit, Asda Group Ltd., may also review a bid for Sainsbury's, people familiar with the matter say. Real estate is at the center of Sainsbury's appeal to potential buyers. Carrefour owns much of the lanf under its more than 12,000 stores in 29 coiuntries. Private equity investors will push the companies to capitalize on the value of the real estate by selling properties and leasing them back to the companies, among other options. (My friends, that's how it works - get that profit).
