Notes on business combinations

First-time consolidation of the Classic Fine Foods group

Pursuant to the contract dated 6 August 2015, METRO Cash & Carry International Holding B.V. acquired a 96.52 per cent share in the Classic Fine Foods group from Klassisk Holding Limited, Cayman Islands. The purchase price amounted to €276 million. The Classic Fine Foods group is a leading Asian premium food service provider with operations in Asia and the Middle East. The acquisition of the Classic Fine Foods group will enable METRO GROUP to tap new business areas in the field of food service distribution. The company’s first-time consolidation was effected in the fourth quarter of 2014/15. The Classic Fine Foods group is part of the METRO Cash & Carry segment.

As of the acquisition date, the fair values of the acquired assets and liabilities of the consolidated Classic Fine Foods group can be broken down as follows:

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€ million

 

Assets

 

Other intangible assets

110

Trader’s brand

48

Customer relationships

62

Property, plant and equipment

4

Financial investments (non-current)

1

Inventories

22

Other financial and non-financial assets (current)

31

Cash and cash equivalents

25

 

193

Liabilities

 

Other provisions (non-current)

1

Deferred tax liabilities

19

Trade liabilities

14

Other financial and non-financial liabilities and provisions (current)

26

 

60

With regard to the determination of the final purchase price and the valuation of assets and liabilities of the opening balance sheet, the first-time consolidation of the Classic Fine Foods group should be seen as provisional.

A put option for the remaining 3.48 per cent share in the company was granted in the purchase contract. This put option was carried as liabilities at its fair value. In addition, the purchase agreement includes contingent considerations in the form of earn-outs. These are tied to the realisation of certain results agreed upon in the purchase contract. The obligations from the put option and the contingent considerations represent an amount in the lower double-digit millions and are recognised under other liabilities of METRO GROUP as of 30 September 2015.

Due to the existing put option, which is accounted for using the anticipated acquisition method, the acquisition is accounted for as if 100 per cent of the shares had been acquired.

The acquisition of the Classic Fine Foods group resulted in goodwill of €143 million.

From the date of first-time consolidation, 1 September 2015, to the closing date of 30 September 2015, the Classic Fine Foods group contributed €18 million to METRO GROUP’s sales and €1 million to METRO GROUP’s profit for the period. The Classic Fine Foods group has about 800 employees.

If the company had been acquired on 1 October 2014, the Classic Fine Foods group would have contributed €215 million to METRO GROUP’s sales and €24 million to METRO GROUP’s profit for the period.

First-time consolidation of the iBOOD group

On 16 April 2015, Media-Saturn acquired a majority share in the Dutch live shopping platform iBOOD.com and assumed control of the company. iBOOD (Internet’s Best Online Offer Daily) is Europe’s largest daily deal platform and was established in 2003. The iBOOD group includes Silver Ocean B.V. (Netherlands) and its subsidiaries iBOOD GmbH (Germany) and iBOOD Sp. z o.o., Poland.

Media-Saturn initially acquired a 50.1 per cent share in the iBOOD group. Put options with successive exercise dates until 2017 were granted for another 34.9 per cent share in the company. As part of first-time consolidation, these put options were accounted for using the anticipated acquisition method and carried as liabilities at their fair value. In addition, the purchase agreement includes a contingent consideration in the form of an earn-out. This contingent consideration is tied to the realisation of certain results agreed in the purchase contract. The obligations from both the put options and the contingent consideration are recognised under other liabilities of METRO GROUP as of 30 September 2015. As METRO Innovations Holding GmbH had already held the remaining 15 per cent share in the iBOOD group since November 2013, this holding was previously recognised under investments. Due to the successive acquisition, this existing share was revalued. The resulting income from the revaluation from €3.1 million to €3.2 million is recognised under investment result in the amount of €0.1 million.

The company’s first-time consolidation was effected in the fourth quarter of 2014/15. As a consequence, the iBOOD group is part of the Media-Saturn segment. The acquisition of the iBOOD group resulted in goodwill of €20 million.

With this acquisition, METRO GROUP acquired assets in the amount of €10 million (including €2 million in receivables from associates), which primarily comprise non-current intangible assets, and liabilities in the amount of €9 million (including €2 million in liabilities to associates). Sales of the iBOOD group from 1 May 2015 until the closing date of 30 September 2015 totalled €13 million. Total annual sales for the period from 1 October 2014 to 30 September 2015 amounted to €33 million. The iBOOD group has around 60 employees.