Reliance Retail to acquire Metro Cash & Carry India for Rs 2,850 crore

The acquisition is expected to strengthen Reliance Retail's physical store footprint across the country

Reliance Retail has signed an agreement to acquire 100 per cent stake in METRO Cash & Carry India for a total consideration of Rs 2,850 crore, which is subject to closing adjustments. 

Through this acquisition, the company will gets access to a wide network of METRO India stores in locations across key cities, a large base of registered kirana stores and other institutional customers and supplier networks, Reliance Retail said in a press release.

The transaction is subject to certain regulatory and other customary closing conditions and is expected to be completed by March 2023.

“The acquisition will further strengthen Reliance Retail’s physical store footprint and ability to better serve consumers and small merchants by leveraging synergies and efficiencies across supply chain networks, technology platforms and sourcing capabilities. The symbiotic relationship will create greater value for all stakeholders in the retail ecosystem,” Reliance Retail said.

METRO Cash & Carry began operations in India in 2003 and was the first company to introduce the cash-and-carry business format in the country. It currently operates 31 large-format stores across 21 cities and has about 3,500 employees. 

The multi-channel B-2-B wholesaler reaches over 3 million customers in India — of which 1 million are those who buy frequently — through its network of stores and its eB2B app.

In FY22 (financial year ended September 2022), METRO India generated sales of Rs 7700 crore (€926 million), which is its best sales performance since its entry into the country, Reliance Retail said. 

Isha Ambani, director, Reliance Retail Ventures, said, “The acquisition of METRO India aligns with our new commerce strategy of building a unique model of shared prosperity through active collaboration with small merchants and enterprises. METRO India is a pioneer and key player in the Indian B2B market and has built a solid multi-channel platform delivering strong customer experience.”

She added, “We believe that METRO India’s healthy assets, combined with our deep understanding of Indian merchant/kirana ecosystem, will help offer a differentiated value proposition to small businesses in India.”

With the acquisition of METRO India, Reliance Retail will continue to build its reach across the country to serve the entire spectrum of Indian society, including households, kiranas and merchants, HoReCa (hotels, restaurants and catering) and small and medium enterprises and institutions, and be the partner of choice for enabling win-win opportunities for producers, brand companies and global suppliers, the company said. 

Dr. Steffen Greubel, CEO of METRO AG said in the same release, “With METRO India, we are selling a growing and profitable wholesale business in a very dynamic market at the right time. We are convinced that in Reliance we have found a suitable partner who is willing and able to successfully lead METRO India into the future in this market environment.”

Greubel added,  “This, on the one hand, will benefit both our customers and our employees, for whose loyalty and performance we are very grateful, and on the other hand, will enable METRO to focus on accelerating growth in the remaining country portfolio.”

Industry observers agree that the acquisition would benefit Reliance Retail. “RIL’s acquisition of Metro’s B2B business should support its new commerce strategy and expand its presence in metros and Tier 1 cities with large-format multi-category stores,” brokerage firm Morgan Stanley said in a report.

It added that with $1billion in bolt-on acquisitions in retail and the recent launch of its own brand, it expects RIL to remain aggressive in the retail space.

JP Morgan, another financial services firm, also views this acquisition as a positive for Reliance, adding that it demonstrates that Reliance’s retail business is continuing to build size, scale and spread across categories and formats.