On a market battered by falling consumption, the owner of Profinetwork has managed to sell the business of Romania for a recordhigh sum, topping even the price two large strategic investors,Carrefour and Auchan, previously paid to take over Artima andAuchan stores.
"They asked a high price for Profi, counting on the growthpotential of the convenience store network, in a year whenhypermarkets are losing clients," a retail player says.
PwC also confirms the sales multiple is high in this deal. "The66m-euro price is an excellent multiple for the around 600m RON(140m euros) sales expected for 2009. Profi deal is the biggestfood industry acquisition ever sealed in Romania and the largestdeal involving a private equity fund this year," stated RaduStoicoviciu, an M&A Partner with PwC.
The price with which Enterprise Investors won the battle withanother two runners left in the final race accounts for almost halfthe 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 thisspring 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, amultiplier of 2.5 times the invested money. We hope, though, itshould be as profitable as the investment in Artima, where we got a3 times multiplier," Nacu also specified.
The Artima-Carrefour deal was sealed at a similar multiple in termsof sales (50%), but in 2007, when food retail boomed. Instead, thedomestic operator of Auchan hypermarkets, MGV Distri-Hiper SA, wasvalued at 65m euros in the autumn of 2008, at the exact moment themarket showed the first signs of decline. The sum Auchan operatorin Romania was valued at accounts for around a quarter in sales thecompany 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 recessionfallout than discounters.
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