By Emma Thomasson
BERLIN (Reuters) - Shares in Germany's Metro climbed on Monday after EP Global Commerce, owned by Czech and Slovak investors, made a takeover offer that values the store group at 5.8 billion euros ($6.6 billion).
EP, which already held a stake of nearly 11% in Metro, made the takeover offer late on Friday, with Metro's biggest shareholder - investment firm Haniel - already agreeing to sell its 15.2% stake.
EP exercised a call option on Monday to buy another 5.4% stake in Metro from Ceconomy, with the closing of the deal to happen in the next few days. EP Global Commerce first bought a 3.6% stake in Metro from Ceconomy last September.
Metro said on Sunday that the unsolicited offer substantially undervalued it, noting that the offer price was only 3% above the closing share price on Friday.
Metro shares rose as much as 4.5% to 16.25 euros and traded 3% higher at 1045 GMT, broadly in line with the offer.
The bidder, co-owned by Czech investor Daniel Kretinsky and Slovak partner Patrik Tkac, argues the move offered "compelling value and a unique opportunity" for shareholders given the difficult market and challenges facing Metro.
Kretinsky's other investments include Czech soccer club Sparta Prague and the group behind French newspaper Le Monde.
Bernstein analyst Bruno Monteyne said EP was offering to pay a "rather big premium for a declining business".
"Clearly management has to do its fiduciary duty to obtain maximum value but we can't see a higher bid coming along," Monteyne said, noting that EP already had a stake of more than 30% with the shares from Haniel and Ceconomy.
The German investors' association DSW said it believed a premium of 30% on the current share price was more appropriate: "We would advise Metro shareholders not to accept this offer," said DSW deputy head Jella Benner-Heinacher.
EP said on Friday its offer price of 16 euros for each ordinary share and 13.80 euros for each preferred share represented a 34.5% premium to when EP first invested in Metro in August.
EP bought into Metro when its shares had hit an all-time low last year after the company cut its outlook due to poor performance at its Russian operations.
Once a sprawling retail conglomerate, Metro has in recent years been restructuring to focus on its core cash-and-carry business, selling off the Kaufhof department stores and then splitting from consumer electronics group Ceconomy.
It operates in 26 countries with 771 stores and 150,000 employees, and it is trying to offload its loss-making German hypermarkets chain Real, as well as its operations in China.
EP has criticized Metro's plans to sell Real, valued at about 1 billion euros, to a consortium led by real estate investor Redos because the price was too low, Reuters reported last month. Metro said on Sunday said it still planned the sale.
Jefferies analyst James Grzinic said he expected Metro would now seek to demonstrate the EP offer was not in the best interest of shareholders, including by giving a timeline for the sale of Real and by announcing it was selling its China unit.
"The onus now is on the business to provide more clarity on some critical drivers of long term value, including the Real and China disposals. At this early juncture we suspect that Metro shareholders can aspire to improved terms," Grzinic said.
(Additional reporting by Matthias Inverardi; Editing by Edmund Blair and Keith Weir)