Financial sponsors table low-ball Migros bids

The private equity firms bidding for the Turkish supermarket have tabled lower than expected bids, although should the deal complete it will be one of the largest European buyout financed since the problems in the credit markets became apparent.

Bids have been tabled for Turkish supermarket Migros at around $3.3 billion (€2.3 billion) undercutting the expected bid price, according to someone close to the bidding.

$3.3 billion

The supermarket’s share price dropped by 6 percent yesterday, closing at $18.91. The share price opened up at $18.99 today giving the business a market capitalisation of $3.38 billion.

Before trade buyer Carrefour dropped out of the auction it had been expected that bids could be as high as $4 billion. Turkish conglomerate Koc Group is selling its 51 percent stake in Migros.

European buyout firm BC Partners, US investment firm The Blackstone Group and US buyout firm Kohlberg Kravis Roberts have all tabled bids for the stake, said the source.

Blackstone is bidding with trade buyer Agrokor and BC Partners is working alongside domestic buyout firm Turkven, he said. The bids are all conditional on due diligence and talks continue with the supermarket.

The transaction size would make it one of the largest European deals by a buyout firm financed since the problems in the worldwide credit markets became apparent in August.

The offer is larger than the highest agreed European bid, Candover’s €1.5 billion ($2.2 billion) bid for Dutch conglomerate Stork in partnership with Icelandic banks Eyrir Invest and Landisbank.

It would also be the largest buyout ever in Turkey, topping KKR’s record €910 million UN Ro-Ro transaction. The Migros transaction would also trump Turkish pension fund Oyak Group’s buyout of steel company Erdemir in a $2.96 billion private equity-style, leveraged buyout last year.