Metro sells fashion unit Adler to private equity

FRANKFURT, Feb 13 (Reuters) – Metro, Germany’s biggest listed retailer, said it sold its ailing fashion store unit Adler to Luxemburg-based private equity fund BluO for 10 million euros ($12.9 million).

Adler, which Metro bought in 2004 for 60 million euros plus 280 million of debt, was handed over debt-free, a BluO spokesman said.

Metro said the transaction will have a double-digit million euro negative impact on its 2008 earnings due to additional writedowns and restructuring costs associated with Adler, but would not affect its full-year earnings forecast.

Metro, which is due to report results on March 24, expects earnings before interest and tax (EBIT) to have grown 6-8 percent last year.

Metro took a 375 million euro writedown on Adler in July, when it announced plans to sell the business within 18 months due to a more difficult clothing market environment.

The business recorded 2008 sales of 464 million euros in 120 stores in Germany, Austria and Luxembourg, employing about 5,800 staff.

German retail sales unexpectedly fell in December for a third consecutive month and data showed on Friday that Europe’s biggest economy shrank at a record pace in the last quarter of 2008 as global demand for its manufacturing exports dropped .

Metro is also looking to sell its department store unit Kaufhof, which recorded a 1.3 percent drop in fourth-quarter sales in stores open at least a year. But Metro has said in the past it was under no pressure and would not conduct a fire sale for the business.

Local rival Arcandor has been looking for a partner for its Karstadt department store unit, which last fiscal year posted an operating loss of 272 million euros.

BluO has just started operations and was founded Peter Loew, Martin Vorderwuelbecke and Markus Zoellner. Loew and Vorderwuelbecke are former chief executives of German buyout firm Arques.

The fund invests in medium to large companies in German-speaking countries with sales of 50 million to 5 billion euros with ‘recognized products, established markets, declining sales and poor operating performance’, it said on its website.

Metro shares did not move much on the news and were up 2.8 percent at 27.53 euros by 1414 GMT, outpacing a 0.3 percent rise in Germany’s blue-chip DAX index.

‘It had been known for a while that they wanted to sell Adler and that’s why there isn’t really any new information in this,’ a trader said.

(Reporting by Eva Kuehnen, additional reporting Christoph Steitz; editing by John Stonestreet) ($1=.7742 Euro) Keywords: METRO/ADLER

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