Next week, I’m interviewing Sir Terry Leahy about his insightful new management book, 10 Words. And his pearls of wisdom on joint ventures came to mind when news of Booker’s acquisition of Makro broke this week.
With his bold and daring strategic strikes, of which Makro is the latest in a growing line, there is something of Sir Terry in Charles Wilson.
So here’s Sir Terry on its acquisition of an 80% stake in Homeplus, the South Korean chain. “What we learnt was simple: be trustworthy, respect the other partner, agree a common objective and identify your complementary strengths.”
Wilson is not the first wholesaler to look at Makro. And, as Makro has gone through numerous turnaround plans, sometimes under the same CEO, before parachuting in first management consultants and latterly Metro’s brightest young talent, one suspects that pride as much as price has been the main sticking point to a deal, as Metro refused to face up to the inevitable.
“With his bold and daring strategic strikes, of which Makro is the latest in a growing line, there is something of Sir Terry in Booker’s Charles Wilson”
Adam Leyland, Editor
After racking up losses of at least £170m in the past five years (including an astonishing £63.2m in 2011), Metro was not in a strong position to negotiate. And Wilson has clearly driven a hard bargain, shelling out just £15.8m in cash for a business that still has sales of £787.4m, assets of £348.7m and more than one million largely complementary customers. A press release from Metro even revealed it would take a further exceptional hit of €200m on completion of the deal so Booker can start with a clean slate.
But Wilson allowed Metro to emerge from this deal with a degree of dignity. By offering a 10% stake in Booker, Wilson offers Metro an upside. Indeed the value of its stake has already increased by 10%, so convinced are investors in Wilson’s ability to make the acquisition pay. And the deal also offers the intriguing prospect of future collaboration elsewhere in the world (p4). In other words, he’s using the language not of victory but of comradeship and collaboration. Sir Terry will be nodding his approval.
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