BC Partners to Buy Turkey's Migros for $3.2 Billion

[Mushtaq]

By Seda Sezer and Edward Evans

Feb. 14 (Bloomberg) -- BC Partners Ltd. agreed to buy Migros Turk TAS, Turkey's largest supermarket chain, for about $3.2 billion in the country's biggest-ever leveraged buyout.

The London-based buyout firm will acquire 51 percent of Migros Turk for 1.98 billion liras ($1.7 billion), or 21.85 liras a share, from Koc Holding AS, according to a filing with the Istanbul stock exchange today. The firm said it will offer to buy out minority stockholders at the same price, which is 11 percent more than yesterday's close.

BC Partners will gain 961 stores in Turkey and nearby countries through the takeover, and plans to profit by boosting the supermarket's share of grocery sales at the expense of street vendors, who control about 60 percent of the market, according to a national industry group. Turkey has 17 supermarkets per million people, compared with 150 in the European Union, according to accounting firm PricewaterhouseCoopers LLP.

``Penetration of organized retail is very low in Turkey and companies like Migros have high growth potential and will increase their market share,'' said Murat Ignebekcili, an analyst at EFG Istanbul Securities.

Migros shares fell 70 kurus, or 3.5 percent, to 19.10 liras at the close of trading in Istanbul, bringing its value down to 3.40 billion liras. The deal values Migros at about 21-times forecast 2008 earnings, according to the average of 18 estimates compiled by Bloomberg. Koc Holding shares advanced 8 kurus, or 1.7 percent, to 4.80 liras.

More here http://www.bloomberg.com/apps/news?pid=20601102&sid=aE4tBXPajBOE&refer=uk

 

[Andy]

No doubt, if they don't sell Bacon & Pork now,
they soon will, plus other UK foods.

 

[Terry the Celt]

I agree and I think such a takeover from a Western group will have quite an effect on Turkey ultimately.
As it says the EU has 150 supermarkets per million population whereas Turkey has only 17 but it will put a lot of pressure on the street vendors and market sellers.
I guess over the next 5 years we will see what other EU influences are brought to bear and whether its a good or bad thing for Turkey.
Certainly such a huge interest from a Western group shows confidence in Turkey,s future retail sector prospects and more choice for us Brits but at what risk to the Turks who get income from market trading etc?

 

[Germaine]

I dont think market traders will be that hard done by, at least not in the tourist area's anyhow. The market traders that aim at the tourists certainly wont be put out of business. westerners on holiday love markets and hate supermarkets. When i'm over I will do one weeks food shop at the supermarket then i never want to see it again till i'm back in ole Blighty. I will spend most of my holiday pennies at the market cos i love a good barter and the Open air Market atmosphere.
As i say it may be a different story away from the tourist areas. The smaller traders normally relying on the everyday trade may be forced to travel to the larger open Markets to shore up their incomes.
I know of people who still make a living as market traders here in the UK and theres a supermarket on every corner.

 

[Terry the Celt]

B.C Partners ltd are a large prestigious Western company and I suppose if they think Turkey is worth investing in, its got to be a feather in their cap for any future EU association.
I take your point re the novelty and atmosphere of market shopping when on a short term holiday jaunt but the convenience of getting all you want under one roof including perhaps items you wouldnt get at a Turkish market, when the stay is longer,may ultimately be more attractive.
Only 17 supermarkets per million population compared with 150 over here suggests one hell of an expansion is possible over the next few years. I understand Tesco are trying to move in too or already have.
Its important to retain the market culture in Turkey though but look at how markets have declined here since the supermarket phenomenon.
It will be interesting to see what the ladies think about Western products being more available and the convenience angle of making shopping easier under one roof.
The ones who are residents may like the extra facility and products whereas holiday visitors may prefer the change of local markets for 2 weeks

 

[Darren]

Funny numbers. The oldest and largest covered shopping mall in the world is in ? - Istanbul - the Kapali Carsi - the "Grand Bazar".

Tesco owns Kipa,
Carrefour owns Gima.
BC now partners owns Migros which owns Tansas.
Bimas ?

 

[Germaine]

How large a chain is Kipa, Carrefour and Gima ? Do they have an in-house supply chain ?

 

[KKOB]

Tesco Kipa Kitle Pazarlama Ticaret ve Gida Sanayi A.S. is a retailing company engaged in the management and operation of shopping centers, supermarkets, hypermarkets and gas and total service stations in Turkey. The Company has a total of 15 hypermarkets and shopping centers in Izmir, Denizli, Bodrum, Antalya, Canakkale, Aydin, Luleburgaz, Konya, Corlu, Usak and Burhaniye, and a total of 15 express markets and two gas stations in Izmir and Antalya. The Company, formerly known as Kipa Kitle Pazarlama Ticaret ve Sanayi A.S., was acquired by the British Tesco Plc in 2003, and became a member of Tesco Group.

Carrefour is a company owned by French based Groupe Carrefour

http://www.carrefour.com

I think they've got about 100 stores in Turkey now.

Gima doesn't trade now as it is wholly owned by Carrefour.

I think too many ex-pats are making the mistake of thinking that a Kipa store will be filled with Tesco products "just like home". Whilst they may have a few British products on the shelves, just like the other chains, they're still going to charge a huge premium for them to cover their distribution and import costs. The majority of their stock will probably be sourced from within Turkey and their customer base will be Turkish.

In the tourist areas it's easy to find supermarkets, and wholesalers stocking "British" products like pork, bacon, Branston pickle, Coleman's Mustard etc. albeit at far higher prices than you'd expect to pay in the UK. As you go further away from the tourist regions of Turkey the likelyhood of finding these products greatly diminishes. However, it's easy to find suitable substitutes if you're desperate for a taste of home.

 

[Darren]

None of them have in-house supply chains of an integrated nature - the sector's supply chains are generally pretty new and not well estanblished in terms of infrastructure- (refrigerated warehousing supply chains for example)- thats because legislation about 5 years ago abolished regional produce markets around major urban centers, ostensibly for health and safety reasons, but effectively this curtailed a large segment of the unresigistered black marlket economy

Anyone with UK/foreign business experience in cold store/refrigerated warehousing and interested in making more than just a few bob in Turkey please PM me

 

[Maura]

I do think that BC Partners take over bid for Migros is a sign of confidence for the future of Turkey, and I would imagine many more internationals are chomping at the bit (Ryan Air included) at the though of the vast internal market that Turkey offers. We can't stop progress and my wish for Turkey is stability and financial security for all but for me personally the magic of Turkey is that it is not the same as towns and cities worldwide where every shop sells exactly the same merchandise. I love the markets and its array of fresh organic foodstuff (not a tree hugger but I am tired of hearing the word cancer every day) No preservatives and plastic wrapping straight from the growers. 6 euro for a few cherries in M&S need I say more

 

[bickern]

I have to admit that Kipa is doing a grand job.

Marmaris branch is really good and I have never had a poor quality cut of meat. Vegetables are not the cheapest though, but all are of good quality. My other half enjoys fish more than meat.

 

[Peregrine]

Funny numbers. The oldest and largest covered shopping mall in the world is in ? - Istanbul - the Kapali Carsi - the "Grand Bazar".

Tesco owns Kipa,
Carrefour owns Gima.
BC now partners owns Migros which owns Tansas.
Bimas ?

dont forget Koc Tas (B&Q)

oh, and in our local Kipa a lot of the Tesco branded stuff is at reasonable prices