Germany's Metro Group is proposing to split itself into two groups: A wholesale and food specialist group and a consumer electrics group, with implementation targeted for mid 2017.
What will the split mean?
The demerger would see Metro, Makro and their associated entities (including Real) form one group, and Media-Saturn and its portfolio of formats and brands become a separate group. Each entity would have its own management board, with full control over corporate strategies and each would be stock listed. Both groups have seen good performance recently and have strong financial profiles, and the proposed split will enable each to focus on its area of expertise. The two businesses currently have little operational overlap so the financial loss of any synergies would be minimal.
Benefits of the demerger
It is believed that the split will facilitate a significant opportunity for faster and more profitable growth. Each entity will be able to independently pursue acquisition and partnership strategies and to define their own expansion plans. It will also increase focus, simplify structures, increase flexibility and improve time to market, beneficial for both groups. The reaction to the proposed plan has been positive, with share prices increasing significantly.
The impact on Metro Logistics
It’s not clear what impact the demerger will have on Metro Logistics, the logistics service of Metro Group. Currently, Metro Logistics is responsible for the flow of Metro Cash & Carry, Real, Media Markt and Saturn, handling 25,000 frozen, fresh and ambient products as well as a strong non-food offering. Metro Logistics Germany handles warehousing, secondary distribution and primary logistics in Germany; whereas Metro Logistics International Supply focuses on all international logistics activities. This simplified management structure offers Metro Group’s retail divisions, especially Metro Cash& Carry and Real, improved logistics services.
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