By Claudia Aquino, Associate Director, Corporates Credit Production

JD.com expects to end up with a 57% stake in Ceconomy (BBB-/Stable) in the EUR 2.2bn the deal which is due to close in H1 2026, representing a change of control of the German company which in itself has implications for creditors.

For Ceconomy’s peers such as Fnac Darty (BBB/Under review for possible downgrade), which also has a fairly wide European footprint, and more local players such as Vöröskő (BB/Stable), which operates the Euronics brand in Hungary, competing with a JD.com-backed Ceconomy is likely to lead to accelerated digitalisation of their activities and efforts to improve efficiency, potentially involving increased capital expenditure and associated financing.

Heightened competition in the sector, long disrupted by e-commerce players such as Amazon.com, may drive further industry consolidation, strategic alliances, or both, as companies seek to maintain scale and profitability. Smaller or less digitally agile players could face credit deterioration or market exit if they are unable to keep pace with the required investments.

With JD.com as its anchor shareholder, Ceconomy looks well placed to improve its competitive position and financial profile over the medium to long term. The Chinese company has a stronger balance sheet, with a net cash position, compared with Ceconomy whose net debt we forecast at 1.9x Scope-adjusted EBITDA at end-2025, slightly down from 2.0x in 2024.

New shareholder should bring operational gains to Ceconomy

JD.com's integration could bring substantial operational advantages to Ceconomy, particularly through access to modern logistics infrastructure. JD.com, through its subsidiary JD Logistics, has established highly automated warehouses in Germany, Poland, the Netherlands, UK and France. The Chinese company operates a same-day delivery network , AI-driven inventory management powered by predictive analytics and real-time stock optimisation, and a highly developed e-commerce ecosystem.

These capabilities would allow Ceconomy to, first, optimise inventory turnover and reduce costs, potentially lifting its currently low Scope-adjusted EBITDA margin which, at around 4%, is below the peer average in Europe.

Secondly, Ceconomy could improve its consumer relations and delivery times by using JD.com’s IT infrastructure to strengthen share of markets where it is already present. Similarly, Ceconomy may now be better placed to expand into higher-growth markets, particularly in Eastern Europe, through a lower-risk and less capital-intensive approach supported by JD.com’s scale and logistical resources.

Bondholders unlikely to seek early repayment

To be sure, change of control has potential more technical implications for creditors that Ceconomy’s future performance as a business. Under the terms of Ceconomy’s EUR 500m senior unsecured bond issued in July 2024 which matures in 2029, bondholders have the right to accelerate repayment and demand redemption in the event of a change of control.

We think it is unlikely that bondholders will demand early repayment. There is little doubt that Ceconomy will meet its obligations. We forecast the company will have available cash of around EUR 1bn in 2025 and 2026 in addition to an undrawn EUR 800m revolving credit facility maturing in 2028.

Holders of the other outstanding EUR 144m bond issued in June 2021 and due in 2026, can exercise this right only if a change of control is accompanied by a downgrade of either the issuer’s credit rating or the bond rating, which is unlikely.

We will likely continue to rate Ceconomy on a standalone basis for two main reasons. There are no plans for a domination and/or profit-and-loss transfer agreement for a period of three years after the transaction is settled. Ceconomy will also continue to be an independent company steering its own business strategy, finances and operations. However, we may apply notching to our rating to reflect potential parent support, depending on JD.com’s capacity and willingness to support Ceconomy in case of financial stress.

Note: This commentary does not constitute a credit-rating action, nor does it indicate the likelihood that Scope will conduct a credit-rating action in the short term. Information about the latest credit-rating action connected with this monitoring note along with the associated ratings history can be found on scoperatings.com.