Magasin Général (MG) has just launched a capital increase operation aiming at completing the takeover of Promogros. The transaction is still raising questions among shareholders of the company which is involved in a reorganization process, especially since the takeover would ultimately cost more than MG as part of its privatization.
Tahar Bayahi, MG senior manager made it clear that the ongoing stock appreciation of the capital increase took into account the real value of the company, adding that he believes that in the distribution sector, enhancing a company in line with its turnover is something that is quite normal and usual. The acquisition of Promogros will consolidate MG and enable it to double its size as far as food section is concerned and to strengthen its geographical position by optimizing its logistics.
All this is absolutely providing value.” We must not forget that MG, when privatized, was purchased on the basis of a share posting more than 55 dinars. We believe that the work completed and investments that have been made throughout this period, allow estimating the capital increase at this level.
He added that the stock appreciation was not brought down to 40 dinars for instance because the company is not worth that amount. Furthermore, MG is losing money. However, MG, as everyone knows, “is a lot of money thanks to its positioning and the potential it is expected to develop in the coming years. And it’s even truer in the distribution business which is buoyant”
Promogros is now enjoying a level of organization and development that is more advanced than MG’s, said Tahar Bayahi.. Its purchase is primarily a strategic operation, but it creates value, as already explained. Therefore, Promogros appreciation is not meaningless; it is an appreciation that is really a strategic acquisition. MG is a group whose turnover amounts to 400 million dinars, with important short-term gains in purchases. Therefore, its appreciation is amply justified. “So, again, Promogros appreciation is in the market and in the market potential”.
Regarding other investments scheduled for the development of MG, Tahar Bayahi pointed out
that the initial plan aims to invest 50 million dinars over two to three years for the rehabilitation of MG outlets.” We got the opportunity to save time by giving scope for a new MG, a new size and a new critical mass. We have seized this opportunity, and this investment does not affect the initial development plan. However, it will certainly be completed as having a little more time. And we will have the opportunity to act in a much more structured and purposeful way, as the acquisition of Promogros also aims to give time and to reorganize an entity that needs time”.
He added that he believes that the current pace will be maintained with regard to the financing of this development. Shareholders will be probably asked anew to make an effort. This again will depend on the pace of the implementation of the rehabilitation.
Asked if the Bayahi will stop buying, he said that “ we are lucky to be in a country that is full of promise which despite what is happening in the world, has shown strength, and confidence , since we are pleased to know that Tunisia Stock exchange ranks first or second the world .We are going international; we believe that our country is an exceptional one in terms of investment opportunities. Undoubtedly, we will now consolidate the new acquisitions before thinking about others.
Tahar Bayahi added that he believes that “ Promogros investment was driven by our commitment vis-à-vis the state to establish a genuine third distribution centre to provide the necessary competition in the retail market , pointing out that this investment boosts this and is part of it.
Asked about Sotuver, he said it is a growing business, extremely interesting and “we believe that the potential of the company is very important”.