Europe’s largest retailer, Carrefour, agrees to sell it’s 25 percent stake in a joint Middle East venture with Majid Al Futtaim (MAF).
MAF reports the deal is worth an estimated USD 683 million, saying in a press release; “Majid Al Futtaim will keep and strengthen the strategic partnership with Carrefour in new countries and new formats.”
In 1995, Majid Al Futtaim Hypermarkets introduced the Carrefour name to the Middle East, North Africa and Central Asia. The venture currently operates 50 hypermarkets and 44 supermarkets. However, MAF will continue to operate under the global retailer’s brand name by retaining its exclusive franchise partnership until 2025.
Carrefour, the world’s largest retailer after Wal-Mart, sold off USD 3.6 billion of assets last year around the world. The company pulled out of Greece, Colombia and Indonesia to raise cash for investments and to improve its balance sheet. Last month, it also sold a 12 percent stake in another joint venture — CarrefourSA in Turkey, for USD 79 million. The French giant retailer has been struggling to increase its profitability as the European economy has failed to make a swift recovery in the aftermath of the global financial crisis.
MAF is eyeing new opportunities in the MENA region and could buy Egypt’s largest supermarket chain from family-owned Mansour Group. In 2012, MAF’s retail division had earned revenues of about USD 5 billion. The company is expected to finance the purchase through the issuance of a hybrid bond. The bond will combine elements of both debt and equity, and mark the first time that it would be used to finance such a transaction in the region.
With a higher coupon rate, the bond could be attractive for global investors, who are looking for investment opportunities in a low yield market across emerging market bonds. As the issuance of corporate debt in the region is still unpopular, the hybrid bond could see high demand.