Jeronimo Martins' €50 Billion Ambition: Can Aggressive M&A Fuel Retail Dominance?

Jeronimo Martins (JM), Portugal's retail giant, has set its sights on a €50 billion sales target by 2030—a 49% jump from its 2024 revenue of €33.5 billion. To achieve this, the company is pivoting toward a more aggressive M&A strategy, a departure from its historically measured approach. This article evaluates whether its conservative M&A track record aligns with its new growth ambitions and whether a shift in strategy could unlock value for investors in a fiercely competitive retail landscape.

A Conservative M&A Legacy, Now Reimagined

Jeronimo Martins has traditionally prioritized organic growth and disciplined cost management over aggressive acquisitions. Its 2015–2025 M&A activity includes the integration of 70 Colsubsidio stores in Colombia into its Ara brand, the expansion of Biedronka in Poland, and recent investments in agri-food ventures like Andfjord Salmon. These moves were characterized by strategic integration, margin preservation, and a focus on high-growth emerging markets. For instance, Biedronka's 30% market share in Poland was achieved through a mix of store openings and selective acquisitions, not reckless spending.

However, the €50 billion target demands a more proactive approach. The company's 2025 capex of €1.1 billion—focused on 130–150 new Biedronka stores and 150 Ara stores in Colombia—signals a shift toward scale-driven expansion. This raises a critical question: Can Jeronimo Martins balance aggressive M&A with its historical financial discipline?

Financial Resilience: A Prerequisite for Aggressive M&A

Jeronimo Martins' balance sheet provides a strong foundation for expansion. As of 2024, the company held €332 million in cash (excluding IFRS 16 adjustments) and maintained a current ratio of 0.61, indicating manageable leverage. Its net debt increased from €1.75 billion in 2020 to €3.06 billion in 2024, but EBITDA margins remained stable at 6.3%, supported by cost discipline and pricing power.

The company's 2025 Q1 performance—31.4% year-over-year net profit growth and a 3.8% sales increase—demonstrates its ability to fund growth without compromising profitability. However, aggressive M&A will require careful capital allocation. For context, J.P. Morgan projects EPS growth from €1.24 in 2025 to €1.67 by 2027, assuming margin expansion and strategic execution.

Strategic Expansion: Biedronka, Ara, and the Next Frontier

Jeronimo Martins' expansion into Slovakia and Colombia exemplifies its M&A-driven growth model. Biedronka's entry into Slovakia, with six stores and a distribution center by mid-2025, mirrors its Polish success and leverages its low-cost model. Similarly, Ara's integration of former Colsubsidio stores in Colombia has boosted EBITDA margins from 2.5% to 3.5%, proving the value of targeted acquisitions.

The company's ambition to open 50 Biedronka stores in Slovakia by 2026 and 150 Ara stores in Colombia by 2025 suggests a willingness to scale rapidly. Yet, this strategy hinges on replicating its Polish model in new markets—a challenge given varying consumer behaviors and regulatory environments.

Competitive Dynamics: M&A as a Defensive and Offensive Tool

The retail sector is highly fragmented, with players like Carrefour and Auchan in France and Zabka in Poland vying for market share. J.P. Morgan notes that Jeronimo Martins trades at a 24% discount to Zabka and 28% to Dino on a P/E basis, despite outperforming both in earnings growth. This valuation gap suggests potential for a re-rating if the company accelerates M&A to solidify its leadership.

In Poland, Biedronka's 7.7% EBITDA margin outpaces Carrefour's 4.5%, underscoring the value of a low-cost, high-efficiency model. Aggressive M&A could further widen this gap by acquiring smaller regional players or leveraging synergies in logistics and supply chains.

Investment Implications: Balancing Risk and Reward

For investors, the key question is whether Jeronimo Martins can sustain its margin resilience while pursuing larger, more complex M&A deals. The company's 2030 roadmap requires scaling from €33.5 billion to €50 billion in sales—a 4.7% annual growth rate—without sacrificing profitability. This will demand:
1. Selective Acquisitions: Targeting underperforming or underpenetrated markets where its low-cost model can thrive.
2. Debt Management: Ensuring that net debt remains below 3.5x EBITDA to maintain investment-grade credit ratings.
3. Integration Expertise: Replicating the success of Colsubsidio's integration in new markets to avoid operational bottlenecks.

J.P. Morgan's bullish case—projecting a 15% stock rally by 2026—hinges on these factors. However, risks include over-leveraging, integration challenges, and regulatory scrutiny in new markets.

Conclusion: A Calculated Bet on Retail Supremacy

Jeronimo Martins' €50 billion ambition is feasible, but it requires a strategic shift from its historically conservative M&A approach. The company's strong balance sheet, margin resilience, and proven expansion playbook in Poland and Colombia provide a solid foundation. However, investors must monitor its debt trajectory and integration capabilities.

For those comfortable with the risks of a high-growth retail play, Jeronimo Martins represents an intriguing opportunity. Its ability to blend disciplined M&A with operational excellence could redefine the European retail landscape—and deliver outsized returns for shareholders.