Profi network valued at the same price as Auchan, which sells twice as much

On a market battered by falling consumption, the owner of Profi network has managed to sell the business of Romania for a record high sum, topping even the price two large strategic investors, Carrefour and Auchan, previously paid to take over Artima and Auchan stores.
"They asked a high price for Profi, counting on the growth potential of the convenience store network, in a year when hypermarkets are losing clients," a retail player says.
PwC also confirms the sales multiple is high in this deal. "The 66m-euro price is an excellent multiple for the around 600m RON (140m euros) sales expected for 2009. Profi deal is the biggest food industry acquisition ever sealed in Romania and the largest deal involving a private equity fund this year," stated Radu Stoicoviciu, an M&A Partner with PwC.
The price with which Enterprise Investors won the battle with another two runners left in the final race accounts for almost half the sales expected for this year for Profi and Albinuta stores (rebranded as Profi in 2009).
"Negotiations to buy Profi were not easy at al, they started this spring and the deal will be completed next year at the latest," stated Cristian Nacu, a partner with Enterprise Investors.
"For investments in Profi we count on a return above our average, a multiplier of 2.5 times the invested money. We hope, though, it should be as profitable as the investment in Artima, where we got a 3 times multiplier," Nacu also specified.
The Artima-Carrefour deal was sealed at a similar multiple in terms of sales (50%), but in 2007, when food retail boomed. Instead, the domestic operator of Auchan hypermarkets, MGV Distri-Hiper SA, was valued at 65m euros in the autumn of 2008, at the exact moment the market showed the first signs of decline. The sum Auchan operator in Romania was valued at accounts for around a quarter in sales the company reported for 2008. The company's 2008 losses, of 7m euros, may have also dragged the price down, though. Moreover, hypermarkets have in the past year been more exposed to recession fallout than discounters.