Press Release
14 February 2008

SARDIS Advises BC Partners in its Acquisition of Migros for $3.2 Billion

Feb. 14 -- BC Partners Ltd. agreed to buy Migros Turk TAS, Turkey's largest supermarket chain, for about $3.2 billion in the country's biggest-ever leveraged buyout.

The London-based buyout firm will acquire 51 percent of Migros Turk for 1.98 billion liras ($1.7 billion), or 21.85 liras a share, from Koc Holding AS, according to a filing with the Istanbul stock exchange today. The firm said it will offer to buy out minority stockholders at the same price, which is 11 percent more than yesterday's close.

BC Partners will gain 961 stores in Turkey and nearby countries through the takeover, and plans to profit by boosting the supermarket's share of grocery sales at the expense of street vendors, who control about 60 percent of the market, according to a national industry group. Turkey has 17 supermarkets per million people, compared with 150 in the European Union, according to accounting firm PricewaterhouseCoopers LLP.

``Penetration of organized retail is very low in Turkey and companies like Migros have high growth potential and will increase their market share,'' said Murat Ignebekcili, an analyst at EFG Istanbul Securities.

Migros shares fell 60 kurus, or 3 percent, to 19.20 liras at 10:45 a.m. in Istanbul, bringing its value down to 3.42 billion liras. Koc Holding shares advanced 12 kurus, or 2.5 percent, to 4.84 liras.

The price is ``5 percent below our valuation,'' Yonca Yagcioglu, an analyst at Ata Invest, said in a note to clients today. She expected the sale to value Migros at 4.1 billion liras instead of the 3.9 billion lira sale price.

Rapid Growth

``Migros is ideally positioned to benefit from the rapidly growing organized food retail market,'' BC Partners executive Nikos Stathopoulos said in a statement today.

BC Partners beat off rival bidders including buyout firms Blackstone Group LP and Kohlberg Kravis Roberts & Co., and Russian billionaire Mikhail Fridman's Alfa Group. Paris-based Carrefour SA, Europe's biggest retailer and No. 2 in Turkey, dropped out of the bidding on Jan. 7 without giving a reason.

The takeover is BC Partners' first in Turkey, and the biggest by any buyout firm in the country, surpassing KKR's $1.3 billion purchase of shipping company U.N. Ro-Ro Isletmeleri AS in October.

Founded as Baring Capital Investors in 1986 by Dutchman Otto van der Wyck, BC Partners manages a 5.8 billion-euro ($8.5 billion) private equity fund. The firm's other investments include British real estate agency chain Foxtons and satellite operator Intelsat.

Buyout firms are struggling to get financing from Wall Street banks for their takeovers in the wake of the subprime mortgage crisis in the U.S. and are turning to markets outside the U.S. and Western Europe, where targets are typically smaller and local banks are able arrange funding.

BC Partners tapped three Turkish banks to finance the Migros buyout. Turkiye Garanti Bankasi AS, Turkiye Is Bankasi AS and Turkiye Vakiflar Bankasi TAO are arranging loans to fund the takeover, BC Partners said. DEA Capital, a unit of Italy's de Agostini SpA, said it will invest as much as 175 million euros ($256 million) alongside BC.

Turkey has attracted about $40 billion of direct foreign investment in the past two years. Retailers from Carrefour SA to Britain's Tesco Plc have opened stores in the country to tap economic growth that has averaged 6.9 percent annually since 2002, helping to double per capita income to about $6,900.

Dusseldorf, Germany-based Metro AG also has a supermarket chain in Turkey and opened its first Turkish Media Markt consumer-electronics shop in September in Istanbul.

Unregistered Economy

Retail sales in Turkey were $137 billion in 2006, about 40 percent of which was registered, according to the Turkish Council of Shopping Centers & Retailers. They may rise 45 percent by 2010, PricewaterhouseCoopers said last year.

Migros Turk's market share was 8.6 percent at the end of 2006, compared with 5.3 percent for second-ranking Carrefour, said Pinar Sahin, an analyst at TEB Invest in Istanbul.

The grocer was founded in 1954 as a joint venture between Switzerland's Migros Cooperatives Association and the city of Istanbul to help develop a modern retail network, according to its Web site. Koc, whose products range from appliances to cars, acquired the company in 1975 and is now seeking to reduce debt after buying the state oil refiner for $4.1 billion in 2006.

Migros Turk has stores in Azerbaijan, Kazakhstan, Kyrgyzstan and Macedonia as well as Turkey, according to the company's Web site.

Koc hired JPMorgan Chase & Co. last year to manage the sale, as it seeks to reduce debt after buying Turkey's state oil refiner in 2005. Sardis Capital Limited and Merrill Lynch & Co. advised BC Partners.