Reliance acquires METRO Cash & Carry business in India. At a very attractive price.

Reliance Retail Ventures Limited (RRVL) is acquiring 100% of METRO India.

  • METRO India started operations in India in 2003 as the first company to introduce cash-and-carry business format in the country.
  • It currently operates 31 large format stores across 21 cities with about 3,500 employees.
  • The business claims to have over 3 mn B2B customers in India, of which 1 mn are frequently buying customers, through it’s physical store network and eB2B app.
  • In FY 22 (ended Sep 2022), it generated sales of Rs 7,700 cr, claimed to be it’s best sales performance since launch.
  • RRVL is acquiring the business for Rs 2,850 cr i.e., at 0.37x sales.

The deal seems suited to RRVL’s retail/ wholesale ambitions and is quite attractively priced. Sales multiple one would expect for a retail/ wholesale business is atleast 2x, whereas a niche business like D-mart is currently valued at >6x.

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