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Poland: Netto will radically increase its marketshare

Discount Retail Chain #Netto #Poland (owned by Salling Group) made an agreement to acquire #Tesco Poland. The planned transaction is now subject to merger approval from the EU Commission and Polish Office of Competition and Consumer Protection, which will be finalised by Q4 2020.

For $ 380 mio Salling Group agreed to #acquire Tesco Poland from the restructuring British grocery giant Tesco. The price is realistic and is in line with Netto's strategical vision to become a significant player in the whole of Poland, not least in southern Poland. Making it a good deal for Netto. The retailer’s parent company, Salling Group, sold 163 Netto stores in Sweden in 2019 to help fund its growth in Denmark and Poland. Where its profits are increasing and further scale is needed.

With the acquisition Netto strengthens its position as third largest discount retail chain in Poland, after #Biedronka and #Lidl. Taking a leap ahead of Aldi Poland. This opportunity gives Netto an opportunity for rapid growth with good locations, especially since so far Netto has no strong position in Poland. It certainly means more competition on the market in the discount segment, which will be beneficial for customers.

The deal consists of 301 stores, 2 warehouses, HQ and 7,000 employees. Netto plans to double its sales in Poland and over the next 12-18 months spending $ 250 mio to integrate and #rebrand the Tesco stores to its recently introduced and succesful Netto 3.0 concept.

According to PMR data, the combined shares of Netto Polska and Tesco Polska for 2019 were 3.6 %. Which means that after a possible merger, the market share of the Danish discount chain will increase by 2.5 %.

Netto's experience in other European markets shows that rebranding will be effective, nevertheless the operational integration of both businesses can be difficult. However, Netto has good (internal and external) integration #advisers and defining a detailed action plan. In fact, integration is, in retrospect, crucial to the success of the entire transaction.

Remains one last question, why did #Aldi Poland not take this chance to breakthrough in Poland? This would also fit in its business strategy after the planned the expensive take over of #Casino's Leader Price in France.

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