Will rent price discord torpedo A.T.U. acquisition?

Late last month it seemed the planned acquisition of A.T.U. by France’s Mobivia would deliver “synergies and interesting development opportunities” for the German tyre and car maintenance chain, however it now appears this appraisal was slightly optimistic. According to information appearing in German publication ‘Manager Magazin’, a major hurdle still stands in the way of the proposed deal’s completion.

In order for the transaction to be successfully finalised, A.T.U. is required to reach a consensus with the owner of a large number of its retail sites regarding a long-term rent reduction. The two parties have not reached any agreement so far, and as Manager Magazin reports, Hans-Joachim Ziems – the restructuring specialist appointed earlier this year to deal with A.T.U.’s woes – believes an inability to agree upon rental terms may result in ATU’s insolvency and the loss of around 10,000 jobs. At the very least, this is one scenario that that Ziems is prepared for.

No company aside from Mobivia has emerged with a serious offer to purchase the retail chain and its approximately 600 outlets. The amount of rent at the centre of the current dispute is around €20 million; Manager Magazin writes that while A.T.U.’s former annual rent amounted to €57 million, the company is prepared to pay just €20 million in future. Lino Management, landlord of 260 A.T.U. sites, and creditors Deutsche Bank and the hedge fund Davidson Kempner, are not prepared to accept less than €40 million.

An A.T.U. spokesman has described the negotiations between the two sides as “very difficult and complex,” yet nevertheless believes it “unlikely” that the negotiations will fail. He added that such a result would be “irrational from the landlord’s perspective.”