10% oppose the deal
A takeover attempt by Carrefour Marinopoulos S.A, seeking 100% control of Chris Cash & Carry (CHR), has run into trouble, after investors owning at least 10% of the share capital made it known that they will oppose the deal.
The opposing group, led by Demetra Investments (DEM), owning at least 5% of the share capital of CHR, together with other institutional investors holding another 5% for a total of 10%, have informed the majority owner of CHR, Andreas Andreou, that they do not intend to accept the 32 cent per share cash offer.
The opposing group is demanding a better deal and may tender in their shares to another group or dig deep to thwart the attempt of Andreou to take the company private.
Rumours, which the Financial Mirror was not in a position to cross check, suggest that the NK Shacolas Group, which is a major supplier to CHR and was previously engaged in talks with Carrefour for a possible joint entry into the Cyprus retail market, may be interested in acquiring the minority shareholders’ stake.
The main stumbling block why the likes of Demetra and other institutional investors oppose the deal is because many have paid substantially more than what the Carrefour Marinopoulos subsidiary is offering.
Many investors paid 50 cents per share during the IPO of CHR and purchased the shares directly from Andreou and other family members and they are now loath to sell them back at the offered price of 32 cents per share. Demetra Investments is also well justified for demanding to receive at least 40 cents and more, considering that they purchased the 5% stake in CHR from Andreou directly at 40 cents per share.
The recent rally in the shares of CHR on the CSE has been directly related to speculation that Carrefour Marinopoulos and Andreou may be obliged to offer a better deal.
During Tuesday’s trading, CHR shares attracted 400,000 shares volume for a value of CYP 124,500 and closed well bid at 31 cents per share, having touched a new record high of 33 cents in intra-day trading, which is a cent above the 32 cents offer price.
One major shareholder in CHR who intends to oppose the deal told the Financial Mirror that it was not fair for Andreou to set up a new company with Carrefour Marinopoulos SA and then seek to assume control of the publicly traded company and delist it from the Exchange.
“I believe that more people (investors) will refrain from tendering their shares and join us (the opposing camp),” the investor said.
Two weeks ago, a subsidiary of Carrefour Marinopoulos S.A, Guedo Holdings Ltd, announced its intention to submit a public offer for the acquisition of a minimum of 75% and a maximum of 100% of the share capital of CHR for a cash consideration of CYP 21.6 mln.
Carrefour Marinopoulos said they will form a new company in Cyprus, which will take over 100% of the capital of Chris Cash & Carry. The new company will then proceed with a public tender offer, seeking to acquire all the share capital of CHR at the price of 32 cents per share.
The 32 cent price, based on the 67.62 mln outstanding shares, gives CHR a valuation of CYP 21.6 mln. The Chairman of CHR, Andreas Andreou who is also the largest single shareholder will tender all his shares, but will control 49.9% of the new company, in which Carrefour Marinopoulos will hold 50.1% stake.
After the takeover is completed Carrefour Marinopoulos will assume day-to-day management of the firm and delist the company from the CSE.
Chris Cash & Carry is the second largest retailer in Cyprus (behind Orphanides) with an annual turnover of CYP 55 mln. The company reported net profits of CYP 1.3 mln for 2004, CYP 1.2 mln in 2003 and CYP 967,000 in 2002.
The company has three Hypermarkets and three Supermarkets in Cyprus and is on track to open its fourth supermarket in July 2005. Carrefour Marinopoulos is Greece’s largest retailer with annual turnover of EUR 2.04 bln and 597 retail outlets.
