Shares of retail giant Metro surge after it moves to split into two

Shares in giant German retailer Metro surged on Wednesday after the group announced that it was considering splitting its operations into two.

The Dusseldorf-based company said it was proposing forging a separate wholesale and food business, with its consumer electronics unit, including its Saturn and Media Markt retail offshoots, remaining part of the existing group.

The announcement sent Metro shares up by 9.8 per cent at 26.98 euros (30.5 dollars) in early trading on the Frankfurt Stock Market.

Metro, which operates more than 2,000 stores in Europe, Russia and Asia, generated sales of about 59 billion euros in its financial year 2014/15.

"The creation of two independent companies would be the logical next step in the transformation of our business towards more growth, customer centricity and entrepreneurship," said Metro Chief Executive Olaf Koch.

The demerger also forms part of a wider shakeout in Germany's intensely competitive retail sector, with Metro last year selling off its department store chain Galeria Kaufhof to Canada's Hudson's Bay as well as selling off business operations around the world.

Earlier this month, German Economy Minister Sigmar Gabriel gave the go-ahead for the country's biggest supermarket group Edeka to acquire rival Kaiser's, which is owned by retail group Tengelmann.

Metro is aiming to complete the proposed demerger by the middle of next year. The two groups would then be listed separately on the stock market.

However, both Metro's management and supervisory boards still have to finally decide whether to proceed with the plan. The company will also have to hold a shareholders' meeting to approve the proposal.

The wholesale and food business would be run by Koch, while Peter Hass, who is chief executive of Media-Saturn, would head up the new consumer electronics business, the company said.

Last update: Tue, 12/07/2016 - 13:50
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