Metro Vietnam business finally sold
Through its TCC Land International unit, TCC Holding has become the new owner of Metro Group’s 19 wholesale stores in Vietnam and the related real-estate portfolio in exchange for €655 million (US$711 million). The transaction results in a cash inflow of around €400 million, according to a release by the German group.
“The payment has already been made,” says the release. The EBIT effect, amounting to more than €400 million, will be part of the income statement for Q1 2015/16.
“The proven competence of the local management and the transitional support of the Metro Group is helping ensure a smooth transition and continuous development of the business,” says group chairman Olaf Koch.
Despite its unpleasant experience in Vietnam, the German giant says it is still pursuing opportunities in Asia.
“Asia will remain an important growth region for Metro Group, and we will continue to invest there in the further development of the Metro Cash & Carry business.”
An immediate effect, noted in expat comments on Facebook, has been the dropping of the requirement of a membership card to shop at the Metro outlets, though this was previously loosely enforced with visitors able to obtain a temporary card simply by asking when arriving at the store – or even walk through without one.
Landing in Vietnam in 2002 as a wholesaler, Metro Cash & Carry has invested broadly in the local trade infrastructure, food hygiene and safety. It generated sales of €507 million in the last financial year.
In August 2014, Metro Group announced an agreement to sell its Vietnam interests to BJC, in which beer tycoon Charoen Sirivadhanabhakdi’s TCC Holding had a 73.7 per cent interest. However, BJC shareholders rejected the deal over concerns about financial risk. Then in February last year, BJC’s parent TCC Holding replaced BJC as acquirer in the framework of an amended sale-and-purchase agreement.
Vietnam news reports say the German firm entered the Vietnamese market with an initial investment of $78 million but has continuously posted losses. It was required to pay tax arrears of more than VND500 billion ($22.2 million) last year. In April, the company was fined nearly $3 million for tax evasion, Inside Retail Asia reported.