Dusseldorf, Frankfurt At first glance, the quarterly figures of the retail group Ceconomy look promising. Compared to the same quarter of the previous year, sales rose by 4.9 percent to 7.1 billion euros. “We held our ground well in a challenging environment,” said CEO Karsten Wildberger on Tuesday at the analysts’ conference on the balance sheet for the first three months of the 22/23 financial year.
But the comparison with the first quarter of 21/22 is not meaningful. In the comparative period, a cyber attack impacted the business and caused sales to plummet. Compared to the first quarter of the 2020/21 financial year, however, sales have currently fallen by 400 million euros. And that was mainly due to a future field: online sales fell by 4.7 percent. The first quarter at Ceconomy even includes the important Christmas business.
In view of the lack of clear development and the low stock market price, Ceconomy threatens to become a takeover candidate with its retail chains Media Markt and Saturn. Since splitting off from Metro in 2017, the stock price has fallen more than 70 percent. The European market leader in electronics trading could become a bargain for investors or competitors.
Ceconomy course collapses according to figures for the first quarter
At times, Ceconomy was valued at less than 600 million euros on the stock exchange. The market capitalization is currently around 1.1 billion euros. After the results were presented on Tuesday, the price temporarily fell by six percent, but recovered again during the course of the day.
“In a historical comparison, the valuation of Ceconomy is not particularly ambitious,” says Volker Bosse, analyst at Baader Bank. Therefore, the company could well become a possible takeover target. “Ceconomy could also become part of a European consolidation among electronics retailers,” suspects the trade expert.
In fact, according to financial circles, there have been talks in the recent past to merge Ceconomy with the French electronics retailer Fnac Darty. According to an insider, the tests were not particularly concrete, more like “mutual sniffing”. However, it is said that a due diligence, i.e. an audit, has already been carried out. A Ceconomy spokesman said when asked that a merger is currently not an issue.
Which would facilitate a possible merger: Ceconomy and Fnac Darty are already intertwined. Ceconomy holds 24 percent of the French retailer, making it the largest single shareholder. Czech billionaire Daniel Kretinsky holds another 20 percent of Fnac Darty through his holding company Vesa Equity Investment. In turn, he had already tried to take over the former Ceconomy mother Metro in Germany. Should Kretinsky succeed at Ceconomy, he would inevitably not be far from a majority at Fnac Darty.
For this purpose, Ceconomy has a group of shareholders that essentially consists of a few large individual shareholders. “That would make a takeover or a merger with a European competitor easier,” estimates analyst Bosse.
Major shareholder Kellerhals is in a key position
The decisive figure in a possible takeover gamble is Jürgen Kellerhals, the son of the deceased Media Markt co-founder Erich Kellerhals. Jürgen Kellerhals recently increased his stake in Ceconomy to 29 percent through his investment company Convergenta. This means that the stake is only one percentage point below the threshold at which Kellerhals would have to make a takeover bid to all shareholders. Kellerhals has thus positioned himself in such a way that nothing can happen without him in the event of a possible European consolidation.
Father Kellerhals held a blocking minority in the operative Media-Saturn-Holding, which the son converted into shares in the parent company Ceconomy after long negotiations. As a result, Ceconomy was able to completely take over Media-Saturn-Holding and subsequently standardize the company’s management structures.
At the same time, this reorganization of the shareholder structure paved the way for a possible takeover of Ceconomy or a merger with a competitor. When asked whether Kellerhals was open to a possible sale of his shares, he did not want to say.
In the presentation of the reorganization for the Annual General Meeting last year, the value of Media-Saturn-Holding alone was estimated at 5.76 billion euros – more than five times the current market valuation of the entire company. The operating business of the Media Markt and Saturn chains was bundled in the holding company. For an investor who believes in the future of Ceconomy, the company should therefore look cheap.
For some other major shareholders, the stake in Ceconomy no longer has any strategic value. For Haniel, the share of almost 17 percent is only a financial investment, according to shareholder circles. The Beisheim Foundation, which holds almost five percent, has even given up a seat on the supervisory board. Beisheim representative Fredy Raas made room for Convergenta Managing Director Erich Schuhmacher.
Ceconomy sells loss-making business in Sweden
With various strategic initiatives, the Ceconomy management is trying to regain more momentum in the business after many years of practically no growth. The focus is on expanding the services area, including repairs, warranty extensions and mobile phone contracts. Although this above-average profitable business is growing at double-digit rates, it only accounted for a good six percent of sales last year.
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Baader analyst Bosse thinks this is the right way. “The stronger focus on service can bring traffic to the stores,” he says. Pure online retailers could not offer that. “In addition, service offers bring good margins and increase customer loyalty,” he is convinced.
However, Bosse sees the greatest potential for growth in the marketplace effect. Ceconomy not only integrates the brand manufacturers as partners on its online platform, but also in the shops. “The strong brands not only make Saturn and Media Markt more attractive for customers,” says the retail expert. “If the brand manufacturers present their products in the shops with their own employees, the customers also get more advice.”
CEO Wildberger sees solid growth in the marketplace business, as he explained at the analyst conference. But management’s outlook remains cautious despite everything. Even in the best scenario, only slight sales growth can be expected for this year.
At least Ceconomy was able to report a success: The company sold the loss-making business in Sweden to its competitor Power International. But that could also make Ceconomy even more attractive for a possible takeover.
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