Metro confident of interest as puts Real hypermarkets on block

By Emma Thomasson

BERLIN (Reuters) - German retailer Metro AG plans to sell its struggling Real chain and is confident of interest in the hypermarkets, which some analysts say could fetch around 1 billion euros ($1.2 billion).

"The fact is that we repeatedly had expressions of interest shows that we can take up the journey again," Metro's chief executive Olaf Koch told journalists on Friday.

Metro said on Thursday that it wants to sell Real, with 282 stores in Germany and 34,000 staff, to focus on its wholesale business.

It has previously tried to offload Real, which posted a loss and saw sales slide 7.2 percent in the latest quarter, which it blamed on an early Easter and unusually hot weather.

Foreign players have shunned the German market since Walmart pulled out of the country in 2006. However, there has been speculation that Amazon could be interested in food retailers in Germany, its second biggest market after the United States, after its acquisition of Whole Foods last year.

"Germany's grocery ecommerce is very underdeveloped and Germany is a very important country for Amazon," said Bernstein analyst Bruno Monteyne, adding that a likely price tag of around 1 billion euros would be no hurdle for the ecommerce giant.

Metro shares, which tumbled in April when it cut its outlook due to poor performance at its Russian operations, were up 1.1 percent at 13.82 euros at 0710 GMT.

Koch said previous talks with interested parties had not failed, but they had not come at the right time as Metro worked on restructuring the troubled business, including agreeing a deal earlier this year to implement lower pay for new hires.

Metro has already sold its Kaufhof department stores and split from consumer electronics retailer Ceconomy.

Real, which sold its stores in eastern Europe to French retailer Auchan in 2012, faces stiff competition in a German grocery market dominated by discounters Aldi and Lidl and has suffered further as online rivals have taken sales.

Walmart took a loss of $1 billion when it sold its German stores to Metro, which rebranded them under the Real banner.

Koch said the move to sell Real was not connected to Daniel Kretinsky buying a stake in Metro late last month, although he said he had met the Czech investor.

($1 = 0.8540 euros)

(Editing by Thomas Seythal and Alexander Smith)