• Orchard Finance

The secret of Coop as an acquisition tiger


“As a company we need from time to time an objective and sober view from the outside on Treasury issues. We have been confident for years with the good and thorough support provided by Orchard.”

Herco Boer, Financieel Directeur


Challenge

Coop Supermarkten (hereinafter referred to as “Coop”) has been a well-known name in the Dutch supermarket industry for over 125 years. Over the years, the company has developed into a nationwide supermarket concept with more than 300 retail locations. In addition, its market share in the food retail sector has grown steadily to over 3.5% today. This growth was achieved both organic and through acquisitions of locations of Super de Boer, C1000 and EMTÉ. In total, Coop has in five years, grown from a turnover of €300 million to almost €1.3 billion in group revenue.

With the development of its growth strategy, Coop needed a suitable financing structure that offered the company sufficient freedom and flexibility to respond quickly to changing market conditions.


Solution

As of 2010, Coop has been supported by Orchard in determining its financing policy and in attracting funding. A solution has been found in which sufficient space is given in covenants and permitted financing to allow for quick actions. In addition, Coop has made maximum use of the possibility to provide security to achieve attractive funding rates. The resulting bilateral structure offers Coop the opportunity to flexibly adjust the composition of its banking group within the existing financing documentation. As a result of this, Coop can act quickly in acquisitions with competitive financing conditions.


Results

Since 2010, the chosen financing solution has proven itself in several acquisition processes. Coop can quickly expand its financing using existing documentation and collateral. Coop can choose between the existing banks and new banks at attractive conditions. By using the existing documentation, the legal costs are limited.

In the most recent transaction, Coop already made agreements in advance in 2017 with its two current banks about additional financing if Coop were to succeed in the takeover battle of the EMTÉ formula. By having entered into a timely dialogue with its banks, Coop could dedicate less time on financing during the actual acquisition process in 2018, instead it could focus on the bidding process and due diligence of the more than 50 EMTÉ stores themselves.

In addition to financing, Orchard regularly supports Coop in updating and implementing its interest rate risk policy.