Germany's MediaMarkt suspends Turkey's Teknosa acquisition plans -sources (updated)
29/08/2018 13:53
(Adds slide in Teknosa shares)
By Ceyda Caglayan and Matthias Inverardi
ISTANBUL/DUSSELDORF, Aug 29 (Reuters) - German consumer
electronics retailer MediaMarkt has suspended plans to buy
shares in Turkey's Teknosa TKNSA.IS , two sources close to the
matter said, after recent falls in the lira hit profits of
Turkish firms.
Shares in Teknosa tumbled 17.6 percent to 3.84 lira on the
news, while the main share index .XU100 was 0.58 percent
lower.
One source said MediaMarkt was reviewing its valuation of
the Teknosa stake following the lira's slide to record lows,
which dampened demand for imported electronics and raised rental
costs for stores, which are mainly priced in foreign currency.
"MediaMarkt has suspended the plans due to recent foreign
exchange volatility. It will review the valuation of Teknosa and
decide later to go ahead with the acquisition or not," the
source said, adding a decision may not be reached until October.
Another source confirmed the negotiations were stalled, but
said they were not completely cancelled.
MediamarktSaturn, which owns MediaMarkt, declined to
comment. Teknosa and parent Sabanci Holding did not immediately
respond to questions about the issue.
The sources did not specify the size of the stake MediaMarkt
was seeking. Sabanci Holding owns just over 60 percent of
Teknosa. Another 10 percent is held by Sabanci family members,
and the rest are free floating shares.
Ceconomy, the parent company of MediaMarkt and
MediaMarktSaturn said in a quarterly report two weeks ago that
the weak lira had weighed on sales in Turkey.
Turkey's electronic goods market was valued at 54 billion
lira at the end of 2017, 16 percent up from the previous year,
Teknosa said in its annual report.
Despite continued growth potential on the back of Turkey's
young population, however, several firms have already downsized
or closed because of intense competition and the steady erosion
of the lira even before this year's 40 percent slide.
That fall in the currency has caused unease among other
companies planning Turkish investments. Japanese firm Toyo Ink
4634.T postponed plans this week for a polymers plant in
Turkey, while retailer Amazon AMZN.O also pushed back its
entry into Turkish markets.
Britain-based Electroworld and French company Darty have in
past years left the Turkish market, selling their stores to
Bimeks BMEKS.IS , while Germany's Electronic Partner and U.S.
electronics giant Best Buy sold out to Teknosa.
Those exits left MediaMarkt as the only international
electronics company active in the country. Domestically,
Teknosa, Bimeks and Vatan are the leading actors in the sector.
Bimeks however has slashed the number of stores in Turkey to
just six from 130 at the end of 2016. Teknosa shut 70 stores in
2016, leaving it with 207 across the country now, and declared
losses of 10 million lira in the first half of this year.
While MediaMarkt Turkey does not disclose its revenue, Chief
Executive Officer Yenal Gokyildirim has said it grew 30 percent
and opened 12 new stores across the country in 2017. MediaMarkt
had 68 stores in Turkey at the end of June, according the parent
company's quarterly report.
In March, Gokyildirim said Turkey, along with Germany and
Spain, was driving the company's sales growth and that
MediaMarkt aimed to expand activities in the Turkish market.
($1 = 6.4440 liras)
(Editing by Dominic Evans and David Evans)
((ece.toksabay@tr.com; +90 312 2927022; Reuters Messaging:
ece.toksabay.reuters.com@reuters.net))