Migros Valued at $2 Billion in Anadolu Bid for Half BC Stake

By Ercan Ersoy

Anadolu Endustri Holding AS, the owner of stakes in Turkey’s biggest brewer and Coca-Cola Co.’s (KO) local business, offered to buy 40.25 percent of Migros Ticaret AS (MGROS) in a transaction that values the second-biggest Turkish retailer at 4.6 billion liras ($2 billion).
Anadolu is seeking to acquire half of BC Partners Holdings Ltd.’s 80.5 percent holding, giving it equal management control, parent company Yazicilar Holding AS (YAZIC) said after markets closed yesterday. Exclusive talks between the two parties may not result in an acquisition, Yazicilar said.
Buying into the grocer would give Anadolu access to outlets in a country of about 80 million people. Migros, which was acquired by a BC Partners-led group for $3.3 billion in 2008, has 1,129 stores in Turkey, Kazakhstan and Macedonia, and is
targeting more than 8 billion liras of sales this year, according to a company statement last week.
“Anadolu is buying an insurance against further curbs on alcohol sales, hence the premium,” said Murat Gulkan, an analyst at Unlu & Co. in Istanbul, in a note. Turkey’s Ak Party government imposed restrictions on the sale of alcoholic beverages by limiting times when shops are free to sell beer and banning visual advertisements in 2013. Migros is one of two chains still selling alcohol in Turkey, Gulkan said.
The offer price of 26 liras a share is about 36 percent higher than Migros’s closing price yesterday. Migros rose as much as 11 percent to 21.15 liras in Istanbul trading today, the most since July 2013.

‘Quite Expensive’

The offer price “looks quite expensive for a company growing low-teens,” said Erol Danis, an analyst at Deutsche Bank AG’s Istanbul unit, in an e-mailed note today.
The bid corresponds to an enterprise value, or market value plus debt, of 15.4 times Migros’s earnings before interest, tax, depreciation and amortization, Danis said. BC Partners paid a multiple of 8.5 times, he said.
The offer may imply that Anadolu Endustri will exit its beer business as it would need 1.9 billion liras to pay for the Migros stake, Danis said. The company owns Turkey’s biggest brewer Anadolu Efes (AEFES) Biracilik & Malt Sanayii AS and has struggled in the past year as sales of its Efes Pilsen beers in Turkey and Russia have slumped.
“We think that Yazicilar may finance the deal without consideration of a spinoff, as it’s quite a cash-rich conglomerate,” Danis said. Anadolu had 892 million liras in cash at the end of June.
Yazicilar rose as much as 7.1 percent to 22.60 liras and was up 3.6 percent as of 12:21 p.m. in Istanbul.