Ceconomy share ignites price rocket: Ceconomy wants to return to growth path – takeover of Media-Saturn | 12/15/20


After years of dispute, the electronics retailer Ceconomy has reached an agreement with the Kellerhals family about their share in Media-Saturn-Holding.

Electronics retailer Ceconomy wants to switch back to growth after the corona-related decline in sales in the past financial year. In the medium term, the development of the electronics market operator, which has been ailing for some time, is expected to improve Media Markt and Saturn improve further. Ceconomy relies on new store concepts and the expansion of e-commerce. The group has set itself the goal of “building the largest omnichannel platform in Europe”. One component is the complete takeover of Media-Saturn-Holding. With this, Ceconomy wants to put an end to the conflicts with the Kellerhals family that have been simmering for years.

Ceconomy will take over the 21.62 percent stake held by the family holding Convergenta, Ceconomy announced on Monday evening in Düsseldorf. In return, Convergenta will receive up to 29.99 percent of the electronics retailer and become its largest shareholder. Convergenta should therefore also be represented on the Supervisory Board in the future.

The relationship between Ceconomy and the now deceased Media Markt co-founder Erich Kellerhals was repeatedly shaped by disputes about the supremacy and direction at Media-Saturn. These go back to the time long before the split from Ceconomy by the retail group Metro in 2017 and some of them were carried out in court. “With this agreement we have left the time of past conflicts behind us and have found a good solution for everyone involved,” commented Ceconomy boss Bernhard Düttmann.

Ceconomy plans to fund the transaction with a mixture of new common stock and convertible bonds and a limited amount of cash. Based on the average price of the Ceconomy share over the past three months, the volume of the transaction is around 815 million euros.

With the reorganization of the shareholder structure, Ceconomy wants to simplify the complex structure of the group. The company hopes that this will save millions, according to a presentation published on Tuesday. In addition, the transaction should have a positive effect on earnings. The previous profit share of Convergenta will be shifted to Ceconomy, which according to the company amounts to more than 50 million euros per year.

A lot is also to be done operationally: The online business should be expanded further and achieve a share of sales in the direction of 30 percent, said Ceconomy on Tuesday. In the past financial year, the e-commerce share was a good 20 percent. Ceconomy wants to turn the stationary stores upside down. There will be four categories in the future: the classic markets with an area of ​​1750 square meters on average will continue to be the focus. “Smart” markets are to become significantly smaller, with the focus here on the quick take-away of the products and services. There is also a shop-in-shop system as well as flagship stores in which the latest technologies are to be shown.

The medium-term strategy also envisages expanding offers and services and introducing new product categories, for example in the area of ​​health. The electronics business in the areas of mobility and smart home, which has been strong during the pandemic, is also to be expanded. Ceconomy wants to increase the share of own brands. Another focus is an optimized supply chain, standardized supplier framework conditions, centralized purchasing and improvements in logistics.

“We are already seeing the first successes of individual measures and are optimistic about the further implementation”, commented Düttmann. “We want to use our very good starting position and grow faster than the market. We want to be the first choice.” In the medium term, Ceconomy wants to increase sales to over 22 billion euros by 2022/23.

For the current 2020/21 financial year (as of the end of September), the Group expects slight currency- and portfolio-adjusted sales growth. The adjusted operating result (EBIT) is expected to increase from EUR 236 million in the previous year to EUR 320 to 370 million. However, reaching the goals depends on the further course of the corona pandemic, said Ceconomy.

In the past financial year, sales fell by 1.8 percent to around 20.8 billion euros, adjusted for currency and portfolio changes, due to the extensive shop closings in the wake of the pandemic. The bottom line was that the group posted a loss of 237 million euros, with depreciation on its stake in the French group Fnac Darty charged.

Ceconomy wants to keep the Kfw loan as insurance for the time being. The company explained that no dividend payment is permitted for the duration. So far, Ceconomy has not drawn on the credit line.

The Ceconomy share temporarily gains 21.58 percent to 4.98 euros in XETRA trading.


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