Investors shun Kretinsky's Metro offer | Progresiv
Investors are so far shunning EP Global Commerce’s takeover offer for German retailer Metro, which the company and some of its leading shareholders have rejected. A filing showed only 0.46% of shares were tendered as of July 30 by investors who had not beforehand agreed to sell. 
Including shares already held by EP Global and shares it can acquire using options, its total position would be 33.18%.
EP Global Commerce, an acquisition vehicle owned by Czech and Slovak investors Daniel Kretinsky and Patrik Tkac, has set a minimum acceptance threshold of 67.5% for the offer, which runs until Aug. 7.
Metro shares were down 2.4% at 14.21 euros by 1222 GMT.
Kretinsky has started talks with shareholders about his plans after influential investors Meridian Foundation and Beisheim Group rejected the offer, sources close to the matter said.
“It’s also about what will happen after a potential failure of the tender offer,” one of the people said, adding that EP Global was not expected to hike its offer substantially or waive the acceptance threshold, meaning it was unlikely to go through.
Waiving the threshold would make it hard for EP Global to get the 75% majority needed for striking a “domination” agreement and getting access to Metro’s cash flows.
Financing a leveraged buyout - EP Global plans to pay for the 5.8 billion euros deal with 800 million in equity and the rest in debt - could be difficult if a domination agreement isn’t in prospect, people close to the matter said.
If the offer fails, EP Global can still use a call option to acquire a Metro stake owned by family investor Haniel. Depending on which of two possible options he uses, he could take his Metro holding to either just below or to just above 30%.
“Our base case scenario is that Kretinsky will cross the 30% threshold,” one of the people said. This would trigger a mandatory offer, which investors would likely shun again.
“But after that he will be free. He will not have to make a tender offer again if he buys more Metro shares at a later stage and can slowly build his position,” the person said.
While Metro’s management, the Meridian Foundation and Beisheim Group oppose Kretinsky’s plans, they may soften their stance at a later stage and work with him for the better of the company, another person said.
Although not regarded as most likely option, Kretinsky could also let the options expire and eventually sell out of Metro in the hope of getting more than the 12 euros a shares average he paid when building his stake, another person said.
A spokesman for EP Global declined to comment. (uk.reuters.com)
