Metro’s new acquisition seen as sign of no Vietnam exit

Metro has bought the Classic Fine Foods Group (CFF), a leading premium food service distribution player headquartered in Singapore, from private equity firm EQT under a US$290 million deal, plus an earn-out of up to $38 million, the German retailing firm announced on Thursday last week.

The CFF serves high-end hotels and restaurants, with a presence in 25 cities throughout 14 countries, most of which are in Asia, including Singapore, Dubai, Hong Kong, Bangkok, Kuala Lumpur, London, Jakarta and Ho Chi Minh City.

The acquisition will increase Metro Cash & Carry's presence from 26 to 36 countries, according to Metro.

Metro is slated to transfer its complete wholesale business in Vietnam to Thailand's Berli Jucker Public Company Limited (BJC), according to an agreement they closed in August 2014.

Under the agreement, the BJC will take over the complete operational business of Metro Cash & Carry Vietnam, including all 19 wholesale stores and the related real estate portfolio, for an enterprise value of €655 million, or $725.3 million, Metro said in a separate press release.

The acquisition of the CFF is thus seen as a move for the German firm to remain in Vietnam with a different business, food service distribution, rather than cash and carry.

The CFF's business comprises sourcing and procurement, import and export, storage and handling, marketing and distribution of high-end fine food products such as dairy, meat, pastry, seafood, high quality perishables, condiments, pasta and dry products, according to Metro.

The company’s customers are five-star hotels, high-end restaurants, airlines, supermarket chains and delicatessen stores, with annual sales of more than $200 million.

“The acquisition strengthens Metro Group's wholesale subsidiary Metro Cash & Carry with dedicated food service distribution capabilities,” Metro said.

Metro can take advantage of the CFF’s existing distribution and warehousing network across the cities it serves to “offer highly flexible delivery schedules.”

Even though it has been a year since Metro and the BJC closed an agreement on the transfer of Metro Cash & Carry Vietnam, it is still unclear when that sale will materialize.

BJC shareholders are concerned that the acquisition will put the Thai company at financial risk, they said at a major shareholder meeting early this year, according to the Bangkok Post.