According to those with knowledge of the situation, Reliance Industries Ltd. is in advanced talks to purchase the wholesale operations of German company Metro AG in India as the conglomerate run by billionaire Mukesh Ambani aims to control India’s enormous retail market.
According to the people, who requested anonymity because the information is confidential, Charoen Pokphand Group Co. is no longer actively in discussions with Metro, leaving just Ambani’s Reliance to pursue the alleged cash-and-carry business. One of the people said that a decision may be made in its entirety as soon as next month.
According to a third source, the firm might be worth between $1 billion and $1.2 billion, including debt. According to the sources, conversations between Reliance and Metro over issues, such as value, are ongoing and may fail. Metro and Reliance spokespeople declined to comment, while a CP Group executive did not respond promptly to requests for comment.
According to its website, Metro entered the Indian market in 2003 and today has 31 facilities around the country dedicated completely to serving business customers. Its main customers are hotels, restaurants, and different corporate units, including small businesses. Currently, Reliance is the biggest brick-and-mortar retailer in the country; a robust wholesale sector would increase its operations there. Along with CP Group and Reliance, Amazon.com Inc. has shown interest in Metro’s potential sale of its cash-and-carry business.
Sources with knowledge of the situation claim that Metro Cash & Carry India supports Reliance as the company’s potential new owner. Many Indians, they claim, believe that Reliance is the most qualified to lead Metro’s operations in India because of its influence in the retail industry and knowledge of Indian legislation. According to a person with knowledge of the situation, Reliance is “believed to be better equipped to purchase and manage Metro’s wholesale assets in India.”
Bidding wars for Metro Cash & Carry India began at the beginning of the year. Ambani’s Reliance has been keen to include Metro’s wholesale operations, which consist of 31 large-format wholesale locations and several warehouses, to strengthen its supply chain network for its retail firm. In a market currently dominated by individual distributors of consumer goods, the combination will help Reliance attract merchants and retailers as well as establish a highly structured distribution network for food and daily essentials.
The conglomerate Reliance is contemplating aggressive development in the fast-moving consumer goods industry, daily grocery, and doorstep delivery at the time of its bid for Metro Cash & Carry India (through JioMart). Ambani has emphasized that improving supply chain efficiency will be essential to Reliance’s expansion over the next few years.
He believes that Reliance is seeking to strengthen its supply chain expertise to deliver services in the “most effective manner” throughout India’s vast region. Reliance Retail will be able to sell things at competitive prices since it will be able to pass on the benefits to its customers while also decreasing waste.
The Bangkok, Thailand-based conglomerate Charoen Pokphand (CP Group), together with Reliance, had first expressed interest in buying Metro Cash & Carry. One of the largest producers of cattle, pigs, and poultry in the world is Charoen Pokphand Foods, in which CP owns a controlling stake. Additionally, it produces a wide range of agricultural goods and manages renowned cash & carries the business through Siam Marko.
The corporation owns 7-Eleven, one of the world’s largest 24-hour convenience store chains. Lightspeed Venture Partners, a private equity group that owns a stake in the Indian B2B e-commerce site Udaan, has expressed interest as well. According to BT, CP Group and Lightspeed have also withdrawn from the race, leaving Reliance as the sole candidate for Metro’s India assets.
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