Sabanci acquires Cosmo store chain

Sabanci Holding, one of the biggest industrial conglomerates in Turkey, is preparing to sign the acquisition of the electronics and home appliances retail chain Cosmo, sources on the market say.
Sabanci Holding, a business worth over 10 billion dollars, intends to buy 51% in Primex, a company based in Targu Secuiesc (Covasna county), which operates the Cosmo store chain, one of the top four players in its line of business.
Gyorgy Baba, the owner of the Cosmo store network and the general manager of the company will retain a minority stake. Sources on the market put the value of the transaction at less than 5 million euros, considering profit margins are dwindling on the retail market. Sabanci will therefore become the first strategic investor entering this market.
The Turkish conglomerate had been probing the market in view of acquiring a retailer since last year, and was very close to buying the Flanco network at some point.
In the end, the shareholders of Flanco chose a different option, merging their network with IT&C retail chain Flamingo.
The takeover of the Cosmo chain will be done through the specialised retail division Teknosa, which is part of the Sabanci Holding.
Neither the representatives of Sabanci nor those of Primex had provided any comment by the time the story was ready for print.
Primex has closed a number of shops lately in order to cut costs. The network totalled 71 shops and a 12,300 square metre surface area, according to the latest available data. Primex posted 33.3 million-euro turnover last year, an increase of 10% on 2004 and net profit of 297,000 euros. The players in this industry were faced with a drop in the sales in the first half, which drove them into the red.
The very short-term outlook on the market remains pessimistic. Dan Ostahie, the owner of the biggest chain on the market, Altex, has recently said that the retail of electronics and home appliances will see a drop of 20% on the white goods (refrigerators, cookers) segment, and by 8 to 10% on the brown goods (TV sets, audio systems) segment, following the new restrictions introduced by the National Bank of Romania.
He added the market would be somewhere in the neighbourhood of 700 million euros this year, below last year’s 800 million euros. Retailers are already closing outlets in a bid to slash operating costs.
Flamingo, the owner of the Flanco network, has recently announced the closure of 20 stores, while Altex will close 10 stores and open 15 of the 25 scheduled for 2006.
The Domo network in turn is planning a campaign to make its operations efficient.
On the other hand, powerful international networks such as Media Markt (Germany) are expected – and feared, to come to Romania over the next few years. Until such a time comes, the local networks are trying to consolidate their positions, either by getting powerful investors to buy into their business, by means of merger, or even by selling to strategic investors. Primex started out as an importer and distributor of Merloni products in 1995, having later expanded its portfolio by including other brands.