German retailer, Metro has proposed to split itself in two, the split will separate its wholesale and food business from its consumer electronics chain to help each focus and grow faster, sending its shares sharply higher.
Metro who also known as Europe’s fourth-biggest retailer has spent the last few years restructuring and selling non-core businesses such as its Kaufhof department stores, to focus on its Metro cash-and-carry business and Media-Saturn consumer electronics chain.
Metro shares jumped 7.5 percent by 0754 GMT, scoring the biggest gain in the German mid-cap index .MDAXI and heading for their biggest one-day gain in more than two years.
Bernstein analyst Bruno Monteyne said “We see this as a positive move, there were limited synergies between the two businesses and a conglomerate discount which can now unwind,”
The split could also help resolve a long-running battle over Metro’s management of Media-Saturn with its billionaire founder, Erich Kellerhals, who still owns a stake of close to 22 percent.
Metro said the two businesses had minimal operational overlap, and the split should help them concentrate on their own activities and create possibilities for acquisitions.
“It’s the logical next step in the transformation of the Metro group,” Chief Executive Olaf Koch told journalists. “We have done all possible preparatory measures over the past weeks and we’re convinced it is do-able.”
The cash-and-carry business runs 750 stores in 21 countries, serving hotels, restaurants and independent traders. It will be spun off together with the struggling Real hypermarket chain, which Metro has tried and failed to sell in the past.