Majid Al Futtaim eyes Spinneys stake after Dh2.5bn Carrefour deal

Majid Al Futtaim may buy part of the Spinneys supermarket chain after acquiring Carrefour's 25 per cent stake in its Middle East joint venture as it builds its retail business across the region.

The Dubai-based company is in the "early stages" of looking at buying Abraaj Group's stake in the Spinneys Middle East franchise outside of the United Arab Emirates, Majid Al Futtaim chief executive Iyad Malas said in an interview at the World Economic Forum in Jordan yesterday.

"The opportunities around acquisitions have been and are primarily going to be in retail, meaning supermarkets and hypermarkets," Mr Malas said. "We'd have to look at how Spinneys would compliment the stores that we have. If there are competing stores then it wouldn't be attractive to us."

Majid Al Futtaim, also known by its acronym MAF, is expanding across the Middle East, tapping the rising disposable income of the region's growing population. The company last week bought Carrefour's minority stake in Majid Al Futtaim Hypermarkets for €530 million. It also expects to complete talks with Egypt's Mansour Group for the acquisition of its Metro supermarket chain in a "few weeks," Mr Malas said.

Spinneys was founded in Alexandria in 1924 and acquired by Abraaj, the region's biggest buyout firm, in 2004. The retailer has outlets in Egypt, Jordan, Lebanon and Qatar and operates in the UAE under franchise.

Spinneys is "one of the companies which we mentioned several times at looking at potentially exiting," Ahmed Badreldin, partner and head of Mena at Abraaj said on May 24. "It's a matter of finding the right buyer profile and the right timing."

A deal with Spinneys would be worth less than $500 million, Mr Malas said. The company has about $800m of cash so would be able to self-finance any future acquisitions or may return to the bond market, he said.

MAF can spend as much as Dh4 billion on capital investments this year after spending Dh2.4bn in 2012, Mr Malas said.

"Whether we spend this or not depends whether we find the projects to spend it on," he said. "The outlook as of today is that we will not be spending Dh4bn."

MAF plans to raise about $500m next week to fund the Carrefour acquisition by selling dollar-denominated perpetual securities, Mr Malas said. The company is holding investor meetings in the UAE, Asia and Europe. It hired Goldman Sachs Group and HSBC Holdings as structuring advisers and BofA Merrill Lynch, JPMorgan Chase & Co and Standard Chartered as bookrunners.

MAF, rated the second-lowest investment grade by Standard & Poor's at BBB, last sold bonds in June 2012 when it raised $500m from the sale of seven-year notes.

* Bloomberg News