Companies | The company of one of the richest women in Portugal wants to buy the scandal-ridden Musti Group – now she tells why

Cláudia Azevedoone of the richest people in Portugal, calmly walks into the meeting room, says hello and sits down to be interviewed.

You would never guess that the Sonae company led by Azevedo has just drafted a press release, in which it is said that the company made a mistake in share transfers and has to raise its purchase offer for the pet supply company Musti Group by ten cents per share.

“Small mistake”, the CFO sitting next to Azevedo João Dolores says.

It still costs someone around three million euros. The public has not been told who will pay the additional cost.

For HS, Sonae stresses that the mistake was made by a party belonging to the buyer consortium, i.e. the CEO David Rönnberg. Nothing has been communicated about the responsibilities related to the error, so it would at least be premature to say that Sonae will pay more than three million additional costs.

Even if Sonae pays for the mistake, it doesn't really sway them. The turnover of the Portuguese multinational group in 2022 was 7.7 billion euros and the combined EBITDA exceeded 900 million euros.

The company is the largest private employer in Portugal, and is a market leader in several different industries.

Sonaeta was long managed by Cláudia Azevedo's father Belmiro de Azevedo. Belmiro de Azevedo, one of the richest in Portugal, died in November 2017.

Among other things, Sonae is Portugal's largest food retailer and has business in the health and wellness, real estate, telecommunications and financial services sectors. And what is most interesting for Finns – in the pet supply business.

And this is why Azevedo sits in an office in the center of Helsinki. Sonae wants to expand its operations into the Nordic pet business.

Finns may be surprised by the interest, but according to Azevedo, the reason is simple: “We looked at our portfolio and wanted to expand into an industry that is growing.”

And the pet business is growing. According to Euromonitor's statistics, the value of the pet supplies market in Europe was around 46 billion euros in 2023. In the next five years, it is expected to grow at an annual rate of five percent.

In the Nordic countries, the pet supply market has grown by 27 percent in five years. Although pets are no longer purchased in the style of the corona era, the market is expected to continue to grow, as more money is spent on pets today than before.

The background behind this is the so-called pet parenting trend. It refers to the tendency of peop
le to treat their pets as family members. This is especially done in the Nordic countries, and that's why Sonae wanted to expand here.

“We first chose the industry we want to expand into, then the country and then the company,” says Azevado.

Musti Group has an annual turnover of just under 430 million euros. It has several store chains, the most famous of which in Finland is Musti ja Mirri.

Sonaw became interested in Musti Group after much consideration and analysis.

“We are cautious investors. We think about every move carefully,” says João Dolores.

To the decision Musti Group was influenced by the fact that the company is the market leader in Finland and Sweden. It didn't hurt that Sonae liked the way the managers of Musti Group did things. Even so much that they wanted to collaborate with them.

Sonae contacted two board members and the CEO and suggested cooperation and the preparation of a purchase offer.

“They bring with them local knowledge that we don't have. It was important for us to get them involved,” says Dolores.

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“If I have a dog, I go to the hypermarket. If I'm a pet parent, I go to Musti and buy special food.”

The purchase offer was made by Flybird Holding oy, which is an investor group formed by the top management of Sonae and Musti Group. Sonae's share is 98 percent, Musti Group's directors two.

Management participation in the takeover bid caused some investors to be angry, and there was a lot of speculation around the matter. In vain, says Azevedo.

“Most shareholders want to raise the price, right? So they use all the arguments in the world to get a price increase. If the price was raised, maybe they wouldn't be so sensitive about it, right?”

Sonae has also been accused of profiting from Musti and Mirri's fall food scandal. The company's reputation took a hit when the food it sold caused dogs illnesses.

Dolores and Azevedo want to make it clear that the claims of benefit are not true. The decision to invest in Musti and Mirri was made years before the food scandal.

“It was actually the opposite. We could have withdrawn our offer as it was a material change, but we decided to continue. And we raised our offer after the food scandal,” says Azevedo.

Musti Group said on Wednesday that the pet food scandal that arose at the end of autumn has cost it around 0.8 million euros so far.

If Sonae becomes the owner of Musti Group, the goal is market leadership in all three countries: Finland, Sweden and Norway.

“Mediocrity is not an option,” says Azevedo.

In Finland, Musti Group already has a clear market leadership, but they are trying to get additional growth from existing customers. Azevedo believes that there is demand in the Finnish market for, for example, light services aimed at dogs, such as grooming, massage and dog physiotherapy.

In addition, tuning could be done to the loyalty system. Sonae has experience with loyalty systems. The company-owned supermarket and hypermarket chain Continentella has the largest loyalty system in Portugal, reaching 4.2 million households. According to Azevedo, this is almost “the whole of Portugal”, since there are ten million inhabitants.

In supermarkets there are shelves of dog food and other accessories, but Azevedo believes that the market is also enough for specialty stores. He believes that pet owners are ready to pay extra for the fact that the service is individual and the products are premium. Especially those who think of their pet as a member of the family.

“If I have a dog, I go to the hypermarket. If I'm a pet parent, I go to Musti and buy special food.”

But food alone will not bring customers to the store, especially if the quality of the food has recently been lacking. This includes individual service and its importance. And Sonae has strong evidence of that.

Sonae is a global small food retail company. International giants such as Lidl and Aldi operate in Portugal. Nevertheless, Sonae's supermarket and hypermarket chain Continente is the country's largest food retailer.

“So we compete with companies that are global giants, but we are still leaders and we are constantly increasing our market share. And the key factor here is knowing the customer.”

Cláudia Azevedo says her family is very fond of animals: “Sometimes there are more dogs than people at family gatherings.” Azevedo himself has a 13-year-old schnauzer, Robin. Picture: Anna Huovinen / HS

Azevedo thinks that part of the company's success is due to the fact that the company is partly a family company. Sonae was founded by Cláudia Azevedo's father Belmiro de Azevedo. Today, the family owns 52 percent of the listed company.

“I always tell people that I want to leave Sonae to my followers in better shape than when I started.”

Dolores is not part of the family, but she feels that family ownership brings independence and persistence to the operation, which not all companies have.

“Here, we don't just think about the next quarter's earnings release, but decisions are made with the next few generations in mind. I think that's great.”

Azevedo he himself has been employed by the family business all his life. Before even getting an official salary. When Azevedo's father wanted to expand into the hotel business, he enlisted the help of his daughter.

“That year, my vacation was spent in the United States, and my job was to change hotels every day during the vacation and report them to dad.”

In one of the second years, the father decided to expand the business into the trade sector, and now Azevedo got to jump behind the wheel of the car.

“I traveled in Spain by car and stopped at every supermarket and hypermarket.”

Since then, Azevedo's career has continued in various positions within Sonae, until in 2019 he became the company's CEO.

Azevedo is not retiring anytime soon. He thinks that the company's next leader may not be from within the family.

“There is a big age difference between me and the next one. But that doesn't matter, the most important thing for the company is to have a good manager. Whether it's from within the family is not important.”