Metro, Makro in wholesale merger

Europe's merger mania took another step forward yesterday, after Germany's Metro, the largest retailer in Europe, announced it would pay 4.97 billion deutschemarks (about HK$21.76 billion) to take full control of the Makro wholesale group of the Netherlands.

The deal is aimed at buying Makro out of two joint ventures it already has with Metro, propelling the company to the forefront of the pan-European cash-and-carry business.

Metro will buy up the 60 per cent stake, owned by Makro, in a joint venture that spans nine countries, and last year achieved sales of 12.1 billion marks.

It will also buy Makro's 40 per cent stake in Metro Holdings of Switzerland, another wholesale business spanning six countries and which chalked up sales of 11 billion marks last year.

Yesterday, Metro said the deal would add significantly to its overall earnings and cash flow next year, and estimated that earnings could rise as much as 39 pfennigs per share and cash flow could be boosted by 1.2 billion marks.

The move comes as northern European retailers brace themselves for poor Christmas sales. Yesterday, Metro warned it expected annual profits to fall 25 per cent on subdued consumer spending.

Consumer demand in Germany in the deciding months of November and December worsened dramatically across all branches of trade, the company said.