By Sarah Sloat
Retailer Metro AG on Tuesday said it has postponed plans for an
initial public offering of its Russian Cash & Carry operations,
falling victim to instability caused by tensions between Russia and
the West.
"We continue to pursue our plans for an IPO of Metro Cash &
Carry Russia, but as always stressed this would require appropriate
conditions in the capital markets," the company said. "In light of
the recent political developments, this is currently not the
case."
Souring relations between Russia and the West have companies
concerned about the potential risks to business in Russia. On
Monday, Ford Motor Co. said it would reassess its Russian joint
venture; and on Tuesday, a German lawmaker said the government
should review RWE AG's announced deal to sell its Dea oil business
to Mikhail Fridman, a Russian billionaire. The $7 billion deal was
announced Sunday, the same day citizens in Crimea voted to secede
from Ukraine and become part of Russia.
"In light of the present situation it should be thoroughly
examined if the talks over the sale of the German oil and gas
producer Dea to a Russian investor should be put on hold," Joachim
Pfeiffer, a lawmaker with Angela Merkel's Christian Democrats, told
Handelsblatt newspaper. Mr. Pfeiffer couldn't be reached for
comment.
RWE said it had no indication the government would object to the
deal.
For Metro, the problem isn't its Russian business or the IPO
market, but the weak ruble, said Bruno Monteyne, a retail analyst
with Sanford C. Bernstein. Investors, meanwhile, are mainly worried
about peace in Ukraine and whether Russia will be hit with trade
sanctions, he added.
"The timing couldn't have been any worse," Mr. Monteyne said,
but "there's nothing Metro can do about it." He said the Russian
operation is very strong despite the geopolitical situation.
Metro has talked to large investors and gotten positive
feedback, according to a person familiar with the matter, but
investors did express concern about buying such an asset now.
Metro's backtracking contrasts with otherwise healthy interest
in retail IPOs, Mr. Monteyne said. Last week, the IPO of discount
chain Poundland Group PLC was a success, rallying nearly 20% on the
London Stock Exchange in its first hours of trading. Poundland
followed other recent retail listings in London, including
Bonmarche Holdings PLC and online domestic electric retailer AO
World.
Metro said in January it would float 25% of it Russian unit by
the end of June on the London Stock Exchange. At the time, people
familiar with the matter said the unit could be valued at EUR1
billion, though the company wouldn't confirm that.
But when the situation in Ukraine worsened earlier this month,
Metro's own shares dropped, and it said it was monitoring the
markets. On Tuesday, traders said the postponement was largely
expected. Metro's shares closed at EUR29.23 each, up 3.8%. Before
the announcement shares had traded 4.5% higher.
The IPO of the Russian cash-and-carry business, which sells food
and nonfood articles to professional customers like hotels, was
meant to raise funds for further expansion in the country. The
flotation would be one of a number of changes Germany's largest
retailer has recently made to its portfolio. Last year, Metro
closed its Media Markt Saturn stores in China, and disposed of its
Real food stores in Eastern Europe.
Eyk Henning in Frankfurt contributed to this article.
Write to Sarah Sloat at sarah.sloat@wsj.com