Steinhoff Makes $924 Million Proposal to Win Darty From Fnac

Industry:    2016-03-03

Steinhoff International Holdings NV Group made an unsolicited, 662-million-pound ($924 million) proposal to buy French electronics retailer Darty Plc, the second time in less than a month that it’s sought to break up an agreed acquisition in Europe. The owner of France’s Conforama furniture chain proposed to pay 125 pence a share in cash, it said in a statement Wednesday. The bid is 8.5 percent above Darty’s closing price yesterday. Darty agreed on Nov. 20 to sell itself to fellow French retailer Groupe Fnac SA in a stock swap that valued it at about 122 pence a share, or 646.1 million pounds, as of yesterday’s close, according to data compiled by Bloomberg. The approach accelerates a European acquisition spree by Steinhoff, which said Feb. 22 it planned to make a 1.4 billion-pound offer for Home Retail Group Plc, owner of the Argos chain, topping a bid from U.K. supermarket operator J Sainsbury Plc. Steinhoff, led by Chief Executive Officer Markus Jooste and South African billionaire Christo Wiese, wants to challenge the likes of Sweden’s Ikea by expanding in Europe after moving its primary share listing to Frankfurt in December. The Darty bid is “another step in Steinhoff’s seeming consolidation of European retail,” said Graham Renwick, an analyst at Exane BNP Paribas. “In acquiring Darty, Steinhoff prevents the merger of its two largest competitors, spreads its retail footprint which can be leveraged across the brands, and obtains know-how in areas such as online.” Higher Bid Darty jumped above the bid price, indicating traders expect a higher offer. The stock climbed 9.5 percent to 126.25 pence at 9:55 a.m. in London, where the company has its main stock listing. Fnac declined 2.4 percent to 59.20 euros in Paris, while Steinhoff dropped 0.6 percent to 5.07 euros in Frankfurt, giving the company a market value of 19.6 billion euros ($21.4 billion). Darty said there’s no certainty Steinhoff will make a firm offer, nor on the terms. The South African retailer said it reserves the right to bid less than 125 pence a share if it gets the agreement of Darty’s board. Steinhoff, founded in Germany by Bruno Steinhoff in 1964, also owns the Bensons for Beds chain in the U.K. The company, while run from South Africa, moved its corporate domicile from Johannesburg to Amsterdam. The sprawling company employs 90,000 people and has more than 6,500 retail outlets in 30 countries from the U.K. to Australia. Its first-half profit rose 67 percent as it expanded in the European and African discount markets. ‘Somewhat Surprising’ “Steinhoff’s bid is somewhat surprising,” said Charles Allen, an analyst at Bloomberg Intelligence. “Its main area of expertise is furnishings and furniture, but by going after Darty they are moving much more firmly in to electrical appliances.” A spokesman for Fnac didn’t respond to a call seeking comment. The Ivry-sur-Seine, France-based company had revenue of 3.9 billion euros in 2015 from selling electronics, books and music.

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