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Majid Al Futtaim dismisses market speculation over Spinneys buyout

Rumours resurfaced in recent weeks that suggested the conglomerate was preparing a bid

Gulf News

Dubai

Speculation has been rife in recent weeks that Majid Al Futtaim was preparing a bid to acquire fellow retailer Spinneys in the UAE, a claim Majid Al Futtaim categorically denied on Tuesday.

Majid Al Futtaim is the operator of Carrefour brand in the UAE. “We do not comment on market speculation of any kind. We continue to look at opportunities that add value to our core business but have no new updates to report on at present,” a spokesperson for Majid Al Futtaim told Gulf News yesterday.

It is unclear where the claims stem from, although Dubai-based Majid Al Futtaim has pursued an aggressive growth strategy this year, purchasing French hypermarket brand Geant for an undisclosed sum in June 2017.

The retail conglomerate announced its intention to rebrand Geant stores as Carrefour at the time of the acquisition.

“An organic growth strategy would be challenging [for Carrefour to pursue] at the moment. There aren’t any more places for them to go. Acquisitions might be the best growth strategy to increase revenue and customer base and presence at this point,” said Colin Beaton, managing director of retail consultancy Limelight Creative Services.

Rumours began around two months that Carrefour intended to acquire supermarket chain Spinneys in the UAE, a licensed franchise of the Lebanon-based company.

They resurfaced last week, according to market sources, with Spinneys a holding a media briefing on Wednesday where they are expected to clarifying the situation.

“Carrefour is the strongest competitor of the brunch. It is probably looking to consolidate its position in what is a highly competitive market,” Beaton said.

“For a retail sector reaching saturation in some spaces, the potential acquisition of a competitor is a logical step to reach in to markets they couldn’t before,” he said, adding: “It gives them the benefit of acquiring real estate spaces in buildings that wouldn’t normally want a Carrefour.”

In the UAE, the grocery market is an oligopoly, dominated by a handful of powerful brands who own the vast majority of market share.

“On the face of it, given a soft retail market, you’d expect the valuations to be lower now than in the past,” potentially encouraging a strategy of acquisitions, Beaton said.

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