Competition will approve the purchase of Sánchez Romero by El Corte Inglés at the beginning of autumn

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At the beginning of July, El Corte Inglés announced the purchase of Supermercados Sánchez Romero with the aim of consolidating the firm chaired by Marta Álvarez as a benchmark in food purchases premium. This operation is expected to be approved by the National Commission of Markets and Competition (CNMC) without problems this autumn, more specifically in early October, as Invertia has learned.

For this type of operations, the Competition Law configures the merger control procedure before the CNMC in two phases in which possible competition problems within the market in question are analyzed.

In this case, Competition already has all the information provided by the two companies and the operation “will not have problems” for its approval since they do not take over a large part of the market distribution nor is there a high concentration of stores in a territory, as confirmed by sources close to the Invertia operation.

However, if Competition analyzes the market share premium distribution, the purchase operation would be in danger since only Sánchez Romero and the Gourmet area of ​​El Corte Inglés monopolize almost the entire market. But sources close to the operation rule out this possibility.

Once the purchase is approved, it will be the moment in which the teams of Sánchez Romero and El Corte Inglés will design the company’s integration strategy. Initially, it is expected to maintain the brand, as confirmed by sources from El Corte Inglés to Invertia.

The operation is closed for a price close to 37 million euros, according to sources close to the agreement. The department stores prevailed over other large chains such as Carrefour and regional supermarkets that showed interest in taking over Sánchez Romero’s stores.

With this operation, El Corte Inglés will add the ten establishments that the company premium has in the city of Madrid, and will incorporate some 9,000 square meters of sales area. It is also done with the distribution platform, which has 4,000 square meters.

Segmento ‘premium’

And although El Corte Inglés was already interested in buying Sánchez Romero many years ago, this acquisition does not exactly respond to removing that thorn in the tooth. This is a strategic purchase at a time of change and transformation for department stores. It is also a way to eliminate a direct competitor.

The operation is important since the segment premium Food is one of the business lines that has grown the most in the accounts of El Corte Inglés, and in the distribution sector in general.

Sánchez Romero currently has about 500 employees and closed the financial year 2020 with a turnover of 61 million euros and an EBITDA of 6.2 million euros. During the Covid they even doubled their market share in the Community of Madrid, reaching 1% (relevant data considering that they have only 10 stores).

It should be remembered that El Corte Inglés is not a stranger when it comes to food. It has the formats of Supermarkets El Corte Inglés, Hipercor and 187 Supercor stores, as well as the Supercor Stop & Go format located at Repsol gas stations. It also has the Gourmet areas in its centers, a format similar to that of Sánchez Romero himself.

Reference-www.elespanol.com

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