French retailer Auchan eyes jv with Landmark group

14 Feb,2012

By Samidha Sharma & Boby Kurian


French retail giant Auchan, touted as Wal-Mart’s most aggressive global rival, has held talks with Micky Jagtiani’s Landmark Group for a possible India entry.


The ongoing discussions centered around a potential joint venture but the final agreement will depend on whether India moves ahead with plans for foreign direct investment (FDI) in multi-brand retail, said at least two people familiar with the talks.


Auchan, the second largest French grocer after Carrefour, is fully owned by one of the wealthiest French families- the Mulliez- who also own sporting goods chain, Decathlon. Auchan has been a fast mover in emerging markets like China and Russia, where it has performed better than global peers Wal-Mart, Tesco and Carrefour. The big-box retailer Auchan, with a special focus on developing hypermarkets, had last reported turnover of over $70 billion.


“The discussions with Auchan are in an advanced stage and a decision is likely to take place in a month’s time,” said a person in direct knowledge of the development. The stores which will come up in India, if the agreement is signed between the two groups, may operate with the Auchan brand name although, the finer details are still to be etched out.


India decided to suspend plans to allow 51 per cent FDI in multi-brand retail in December following a lack of political consensus, but could revive it after the crucial elections to state assemblies next month.


Landmark may forge a franchise agreement with the French retailer till the FDI norms are relaxed in multi-brand retail, said one of the sources mentioned earlier. Landmark Group currently runs the Dutch retail chain Spar in India through a licencing agreement signed in 2007 which comes to an end in December this year.


The Spar MD Gordon Campbell who was in India last month had said they were open to engaging with other partners to expand more aggressively here. Spar has 10 stores in India currently.


Sources close to the development said that Mr Campbell’s statements to the media did not go down well with Max Hypermarkets, a part of the Dubai-based Landmark Group, and the partnership with Spar is virtually over.


A detailed email sent to Groupe Auchan remained unanswered while a company spokesperson for the Landmark Group was unavailable for comment.

The Croix, France based- Groupe Auchan SA, operates 581 hypermarkets and 2,384 supermarkets and minimarkets as per the company’s 2010 annual report. “We are clear-sighted – the outlook is more positive in emerging countries than in the Euro zone where the crisis is not yet over and continues to strongly depress consumer spending. 2011, our 50th year, will see the number of hypermarkets worldwide break through the 600 mark. We also plan to continue developing franchise and partnership agreements,” said Vianney Mulliez, chairman of the board of directors, Groupe Auchan in the annual report.


In China, Sun Art Retail group, a joint venture between Groupe Auchan SA and Taiwan based-Ruentex Group, successfully raised $1 billion in a Hong Kong Initial Public Offering last year, the proceeds of which will go in its expansion.


Sun Art operates 197 hypermarkets across mainland China under two brand names, Auchan and RT-Mart. The other big market for Auchan is Russia where it has around 50 hypermarkets.


The $70 billion Auchan has told Landmark Group’s Max Hypermarket that it would prefer a JV if India allows multi-brand retail FDI.


Source:The Economic Times

Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

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