Steinhoff bows out of bidding war for Darty
STEINHOFF International would not raise its offer for French electronics retailer Darty, it said yesterday, effectively ended the bidding war with French retail chain Groupe Fnac.
Steinhoff said its subsidiary Conforama’s third increased offer of 160 pence (336c) per Darty share, made last Friday after a flurry of statements and increases, was final, and would not be increased. The decision leaves the way clear for Fnac, which on Monday raised its offer to 170p per share, beating Conforama’s highest bid of 160p per share offer.
Conforama’s chief executive Alexander Nodale said: “We remain of the opinion that, at (160p per share), the Darty business would have been a good addition to the Steinhoff group of businesses, but at an increased price it would no longer create sufficient value for Steinhoff shareholders, employees and other stakeholders.”
Steinhoff’s offer valued the London-listed Darty at approximately $1.2 billion (R17.3bn).
Nodale said the Conforama board and management had a clear valuation in mind for the stand-alone Darty business. “Our final offer of 160p for each Darty share reflects the evaluation criteria we use for all acquisitions, including return on investment and value creation,” Nodale said.
The quest for Darty has seen the two companies buy up stakes in the French retailer. Fnac owns approximately 30 percent of Darty, while Steinhoff last Friday increased its interest to 20.4 percent.
Courageous
“It was a tough but courageous call for Steinhoff to walk away from the deal. The price had escalated,” Mark Hodgson, an analyst at Avior Research, said yesterday.
He said it could still make some money by selling its 20.4 percent interest in Darty.
Steinhoff and Fnac’s successive bids and share purchases have boosted Darty’s share price. The company’s share price peaked at £172 on Tuesday. Around this time last year, the Darty share price was about £75 a share. Steinhoff last week raised its offer to Darty three time in less than 24 hours. “They clearly wanted (Darty) badly, but not at any cost,” Hodgson said.
Steinhoff last month abandoned another bidding war with Sainsbury’s for Home Retail Group. “It may look bad at the moment, but it is about waiting for the right asset,” Hodgson said.
Estimated value of Darty after Steinhoff’s offer
Michael Treherne, a portfolio manager at Vestact, said yesterday that it stood to make money by selling the Darty shares. “They bought those shares at £138 a share,” Treherne said. Darty shares on the London Stock Exchange were yesterday afternoon trading at £168.56 a share. He applauded Steinhoff for pulling out.
“Shareholders will be comforted to know that the company knows its limits,” he said.
He said Steinhoff would probably look for other assets because it had already raised money for the Darty transaction. “They have already raised the money at favourable rates,” he said.
Steinhoff shares surged 2.77 percent yesterday to close at R89.56. – Additional reporting by Bloomberg