It is poised to close the gap on Aldi and Lidl, following the announcement of a joint venture with Tengelmann’s discount grocery chain Plus. It is also understood to be interested in Metro’s Extra chain, which is believed to be up for sale.
Edeka chief executive Alfons Frenk told the Frankfurter Allgemeine Sonntagszeitung: “In principle, Extra is interesting. But first things first. So far, we have not made an offer.”
He added that the partnership with Tengelmann is “only the first of a major growth story”.
As part of the 70 per cent majority stake, Edeka’s Netto discount division will join forces with the Plus chain, giving the new group more than 4,000 outlets and combined sales of more than 11 billion (£7.85 billion) in the 2007/2008 financial year.
Planet Retail global research director Bryan Roberts said: “The German retail market is as tricky as it has ever been. But Edeka will strengthen its position, with this venture giving it the opportunity to close the gap on Aldi and Lidl. It will intensify Edeka’s buying power, which will achieve lower prices.”
He added: “The Extra business is a weak part of Metro. With this purchase, Edeka would be able to strengthen its leading position in grocery retail.”
Edeka declined to reveal how much it paid for the Tengelmann joint venture. Plus and Netto stores will keep their names and the group plans to open up to 300 outlets a year. About 1,000 Plus stores outside of Germany are excluded from the deal.
The deal is pending approval from Germany’s competition authorities, but Roberts said that he couldn’t foresee any regulatory issues.
No comments yet