TheChek News Flow

Jeronimo Martins (JM) [ELI:JMT], a listed Portuguese food retailer, is eager to expand further in Colombia and other regions, including through acquisitions, said Ana Luisa Virginia, chief corporate center officer.

In addition to recently entered Colombia, JM is monitoring other members of the Pacific Alliance (Chile, Peru and Mexico) for expansion opportunities, said Virginia, who spoke to this news service on the sidelines of its results conference.

It is also eyeing opportunities in countries that neighbour Poland, where it has a chain of hard discount supermarkets called Biedronka, she said. It is interested in analyzing proposals from advisers of opportunities in these regions.

Virginia noted that in terms of the countries where it already operates, it has anti-trust limitations in Portugal and Poland, while Colombia, where JM has been present since 2013 only, offers more expansion opportunities. JM expects to open 150 stores in the country this year, having ended 2016 with a total of 221 stores in the country.

Last year JM reportedly studied the auction of Profi Rom Food, a Romanian supermarket chain, which was eventually acquired by Mid Europa Partners in December in a EUR 533m deal. Virginia declined to comment on JM’s participation in this process.

According to one Lisbon-based analyst, a EUR 500m investment is relatively easy for JM. It would make more sense for JM to acquire a chain of supermarkets in a new country and smaller chains or individual stores where it operates, he said. Aside from Latin America and countries neighbouring Poland, JM was interested in entering Ukraine but pulled out because of the political unrest and chose Colombia instead, he said.

A second Lisbon-based analyst noted that JM has identified seven regions in Colombia where it wants to expand its supermarket network, which could include the acquisition of smaller, regional supermarket chains. These seven regions include the main cities of Bogota, Medellin, Pereira, Cali, Barranquilla, Cartagena and Bucaramanga.

In terms of new countries, countries near Poland make more sense than near Colombia, he said. Profi Rom Food in Romania was a natural expansion of JM’s Polish operations, he said.

JM has a conservative net debt to EBITDA ratio of between 0.3 to 0.35 and could comfortably increase this to 0.5 to raise EUR 400m to EUR 500m for an acquisition, he added. It would make sense for JM to eventually enter the western part of Ukraine, bordering Poland, he concluded.

Recent acquisitions include some individual stores of the Portuguese Alisuper supermarket chain in the Algarve it bought in 2015. Last year Rothschild advised JM on the sale of Monterroio – Industry & Investments B.V., its Netherlands-based food distribution company, to Sociedade Francisco Manuel Dos Santos, the holding company of the family which controls JM.

At the company’s 2016 results conference JM announced a EUR 700m investment for 2017, though Virginia explained that any potential M&A is not included in this amount. A large portion of the EUR 700m capex will be spent on logistics – for building three new distribution centers in Colombia, one in Poland and one in Portugal.

The sale of Monterroio for EUR 310m helped JM post EUR 593m in profit in 2016. If the Moterroio deal is excluded, JM’s profit would be EUR 361m.

JM’s EBITDA in 2016 came to EUR 862m on sales of EUR 14.62bn. Because of its strong results, JM decided to propose a dividend payment of EUR 380.2m, corresponding to EUR 0.605 per share.

Nordea, the Nordic bank, is unlikely to be interested in acquiring the Dutch ABN Amro, according to Talouselama. The item cited Antti Saari, a share strategist from OP Bank who was commenting on Nordea’s results.

Nordea's share has risen since last summer by 60%, the item said, adding that there could be a M&A move from Nordea. Saari, however, said that it is unlikely Nordea will make another attempt to acquire ABN Amro after the Dutch election. According to him, it was merely a signal to show that Nordea my not keep its HQ in Sweden forever.

Talouselama is a Finnish business weekly, which is behind a paywall.

Christophe Sirugue, the French Industry Minister, has said in an interview with Italian language daily La Stampa that Italian ship builder Fincantieri [BIT:FCT] should hold less than a 50% stake in French shipbuilder STX France.

The item noted that Fincantieri has reached an agreement to acquire 66.7% of STX France from bankrupt South Korean ship builder STX Offshore & Shipbuilding. However, Sirugue said that the French government wanted to restrict Fincantieri to less than a 50% stake because Fincantieri was a direct competitor of STX France and that there was a danger that the synergies rising from the deal could weaken the French shipmaker.

Sirugue added that there were no plans to nationalise STX France. He added that he was also open to the idea that a second Italian company could ally with Fincantieri so that collectively they held a majority stake in STX France. However, Sirugue noted that the second company would have to be privately owned.

As reported, the sale of a 66.7% stake in STX France is expected to raise EUR 100m-EUR 200m.

Unilever [LON:ULVR] [AMS:UNIA] shareholders quoted in reports in The Sunday Times and The Sunday Telegraph have separately urged the FTSE-100 consumer goods company to offload its food division. The Sunday Times quoted one of the top 10 shareholders who urged Unilever to sell all or part of its GBP 10.6bn (EUR 12.51bn) food division, while The Sunday Telegraph reported that the 14th biggest investor in Unilever’s Amsterdam-listed shares, Allianz, considers spinning off the Anglo-Dutch group’s food business is the most acceptable option.

The Kraft Heinz Company [NASDAQ: KHC], a Chicago, Illinois-based food company, announced on 17 February that it had made an offer for Unilever and that the Anglo-Dutch company had rejected the bid. Kraft Heinz, which is backed by Warren Buffett and the private equity firm 3G Capital, said on 19 February that it had withdrawn its offer.

Unilever Chief Executive Paul Polman last week said the company will conduct a wide-ranging review, The Sunday Times item said, adding that the results of the review will be disclosed in April.

The review is likely to lead to a sale of some Unilever brands, including Hellmann’s mayonnaise, Marmite and Flora, the report continued.

The top 10 shareholder agreed with Unilever’s rejection of Kraft Heinz’s GBP 115bn (EUR 135bn) takeover bid on the basis that it was not high enough, with the stock component of the offer deemed by the shareholder to be lacking in value.

The shareholder added that Unilever should turn its attention to making large acquisitions for its personal care division. The report noted previous speculation of a Unilever takeover bid for the toothpaste companies Church & Dwight [NYSE:CHD] and Colgate-Palmolive [NYSE:CL].

Unilever refused to comment, the item said.

The Sunday Telegraph report said Unilever is believed to be thinking about spinning off its food division into a separately-listed company.

The newspaper went on to quote Aviva Investors fund manager Giles Parkinson, who said the firm is happy that Unilever’s review will consider all options.

Unilever’s personal care business comprises about 60% of the group and has a sales growth rate of 4.2%, while the company’s food division’s sales are only half that of the personal care arm, the item continued. Unilever’s food division has sales of EUR 10bn, according to the report.

Top shareholders canvassed by The Sunday Telegraph voiced support for Polman, noting that the CEO is under pressure at present.