BERLIN: German retailer Metro AG plans to split in two, listing its wholesale and food and consumer-electronics businesses separately in the hope of boosting their sales growth and profits, the company said here the other day.
Metro said here the other day that no final decision has been taken on a demerger which would require approval from stockholders though the plan has the support of senior management and the group’s main shareholders.
Investors reacted enthusiastically to the proposal, with shares in Metro rising more than 13% in early afternoon trading on the Frankfurt bourse, boosting the group’s market capitalization to around €9.09 billion ($10.30 billion).
Metro has been struggling with declining revenues and volatile profits for the past five years, along with the complexity of its sprawling operations.
Chief Executive Olaf Koch has attempted to tackle the issue in recent years by divesting some businesses, including by selling department-store chain Galeria Kaufhof to Canada’s Hudson Bay Co. in 2015. He has also exited some Asian operations.
But the current plan of splitting the company in two parts, which requires approval from the supervisory board and shareholders, is the most dramatic move Metro has undertaken to simplify its empire of more than 2,000 wholesale food stores, supermarkets and electronics outlets located throughout Europe, Asia and Africa.
Annual revenue at the electronics business was €21.7 billion for the 12 months ended September 2015, while revenue at the food operations exceeded €37 billion.
