Fnac throws its latest financial forces in the fierce ongoing battle to seize Darty and add 6% to the pot. For the third time in four days, the French retail group raised its bid, bringing it to 170 pence per share in the London Stock Exchange, which trades the sign of electrical appliances. The new offer values Darty to 1.16 billion euros against 1.09 billion last offer dated Conforama, which offered 160 pence per share Thursday Darty. The two groups are engaged for weeks in a bidding war for control of home appliance distributor.
This offer Fnac, which will be financed by using several lines of credit, however, should be the last in the stock tussle between the south African owner of Conforama Steinhoff for several months: this is his “ultimate escalation” , said that Fnac has set aims to reach 50.1% stake in the French leader in electrical appliances.
Conforama reacted against this new proposal, stating “the situation” inviting shareholders not to take any hasty decision by contributing their shares in Fnac. But the market seems to bet on a new and umpteenth increase in the supply of Conforama since the end of the day Darty share jumped again above 170 pence in London Stock Exchange. The Darty shares closed the day at 171.75 pence, up 5.37%.
Five bids within 24 hours
“They obviously have the means, judge an observer, now it is possible that a certain rationality ultimately prevail. “ But nothing is less certain in view of the runaway of last week and even more so by renouncing acquire Home Retail Group, a specialist in furniture Outre Channel finally bought by Sainsbury, Steinhoff now has a free hand to pay Darty. Its market capitalization exceeds 20 billion euros – against 900 million for Fnac – and the group had net cash of 1.5 billion euros even if he will also use bank loans to finance an operation announced 100% equity in his first firm offer in March. Last Thursday, Fnac and Conforama had multiplied in turn the against-offers no fewer than five bids in 24 hours.
recipient Become again last year, renowned for its customer service and networking its sales network in France (263 stores against 116 for Fnac and Conforama 204), Darty, the inventor of the “contract of confidence” would allow each of the two contenders to increase its firepower to resist the pure players in the Internet like Amazon or Cdiscount french, Casino property in a market of household electrical hotly contested.
diversification strategy
But beyond the proposed amount that should be ultimate justice of the peace office for shareholders, the two projects are part of a different dynamic. For Fnac, Darty acquisition would be the opportunity to acquire a new dimension in the appliance market, which restarts. A field she began exploring successfully since 2012 by engaging in the distribution of kitchen appliances such as coffee machines or bread-grid to offset the structural decline of its cultural markets impacted hard by the dematerialization of media in music and image. But there remains a small player compared to Darty and 3.5 billion euros of activity against 3.8 billion in total for Fnac.
This diversification strategy thus allow it to extend its offer beyond technical and cultural products still account for the majority of its sales and be more competitive in the ecommerce enjoying better rates with suppliers. The sign directed by Alexandre Bompard which proposes to install corners in Fnac and Darty reciprocally figure to 130 million euros of synergies that marriage. A figure revised upwards – it was originally 85 million – adding IT investments both banners that could be shared
“Over 3 000″ jobs threatened
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Meanwhile, Conforama highlights its commitment to “create a leading distributor of products and accessories for home, operating under established brands and complementary” . The South African group that at this stage refrains from any costing of future synergies stresses of its market share expansion strategy in Europe where it generates 59% of its turnover. A speech that is reassuring with the promise not to touch the actual Darty to reduce operating costs of the new set. Darty employees have also indicated through their inter Friday that they rejettaient “clearly the desired rapprochement by Fnac that [...] will lead to a total fiasco on employment signs. “ They believe ” more than 3000 “ the jobs threatened by a merger.
Finally, regardless of the winner, it will remain to obtain the agreement of the competition authorities. From this perspective, the marriage of Fnac and Darty could be problematic in large cities like Paris or Lyon where two signs are sometimes distant a few hundred or even tens of meters. Fnac could be forced to cede some stores while Conforama is more situated on the outskirts of small and medium cities is also present Darty but also other rival brands such as Goal or Boulanger. Steinhoff seems to have a slight advantage in this area but will ultimately depend on its willingness to bid again for the fourth time. Monday at the Paris Bourse, the Fnac Action clôturait down 1.19%.
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