Metro Cash & Carry India prefers Mukesh Ambani's Reliance as its future owner

After taking charge of the hundreds of stores of the country’s second-largest modern trade player Big Bazaar earlier in the year, centibillionaire Mukesh Ambani is at the forefront of another major takeover in the retail space. As Reliance emerges as the sole bidder for the German wholesale giant Metro’s India operations, key stakeholders seem to flock behind it.

Sources aware of the developments told Business Today that Metro Cash & Carry India is in favour of Reliance as its future owner. According to them, many in India feel that Reliance, due to its clout in the retail market and its understanding of the Indian policy framework, is best suited to run Metro’s India operations.

“It is believed that Reliance is better placed to acquire and run Metro’s wholesale assets in India,” said a person who is aware of the developments. 

"Please understand that we are not commenting on rumors and market speculations,” a Metro AG spokesperson responded to emailed queries.

The race to acquire Metro Cash & Carry India begun earlier in the year. Ambani’s Reliance has been keen on adding Metro’s wholesale operations, that include 31 large-format wholesale stores and multiple warehouses, to strengthen its supply chain network for its retail business. The merger will also help Reliance in luring retailers and traders and developing a robust organised distribution network of groceries and daily essentials - an area that continues to be dominated by standalone distributors of consumer goods.

Reliance’s bid for Metro Cash & Carry India comes at a time when the behemoth is planning aggressive expansion in the fast moving consumer goods space, daily groceries and doorstep deliveries (through JioMart). Ambani has emphasised supply chain efficiencies will play a crucial role in Reliance's growth in the next few years.

According to him, Reliance is working to strengthen its supply chain capabilities further so that it can serve across the vast Indian geography in the “most efficient manner”. This will not only help it reduce waste but will also allow the company to pass on the benefits to its customers - which effectively means, Reliance Retail will be able to offers products at competitive prices.

Apart from Reliance, Bangkok (Thailand)-based conglomerate Charoen Pokphand (CP group) was also initially in the race to acquire Metro Cash & Carry. CP owns a controlling stake in Charoen Pokphand Foods and is one of the world’s largest producers of shire, pork, poultry. It also produces many agri-based items and operates a leading cash & carry business through Siam Marko. The group operates one of the world’s largest round-the-clock convenience store chain 7-Eleven.

Private equity player Lightspeed Venture Partners, which has a stake in Indian B2B e-commerce platform Udaan, had also thrown its hat in the ring.

However, both CP Group and Lightspeed have withdrawn from the battle and now Reliance is the sole runner for Metro’s India assets, sources have confirmed to BT.

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Also read: Reliance, CP group, PE firms in race for Metro Cash & Carry India