European white goods retailer Darty (DRTY) sparks up 9.3% to 126p on bid war excitement, as Steinhoff International (SNH:SJ) makes a possible offer of 125p per share, higher than the current offer from Groupe Fnac (FNAC:PA) and a cleaner one too, being all in cash.

The £660 million bid for Darty is an attempt to gatecrash a recommended offer from French books and music retailer Fnac agreed last year (20 Nov), as South African conglomerate Steinhoff continues to internationalise and diversify away from its domestic currency.


The approach comes from Conforama, France's second largest furniture and household goods retailer by market share. Its ultimate parent is Steinhoff, the owner of Bensons Beds and Harveys in the UK, whose biggest shareholder is deal-hungry South African billionaire Christo Wiese.

Steinhoff is mulling a counterbid for Darty, the tablets-to-televisions purveyor in the midst of a compelling turnaround. In response to press speculation, Darty says it is 'currently reviewing the proposal received from Conforama. There can be no certainty that any firm offer will be made by Conforama, nor as to the terms on which any firm offer might be made. The board will issue a further statement if and when appropriate. In the meantime, Darty shareholders are advised to take no action.'

Analysts view Steinhoff's tilt at Darty as a further attempt to beef up its European presence and profile, having recently moved its primary listing from Johannesburg to Frankfurt and last month lodged a counterbid bid for Argos-owner Home Retail (HOME), disrupting J Sainsbury (SBRY) boss Mike Coupe's bold merger plan.

Conforama believes a Darty deal would create 'a leading French household goods retailer, operating under well established and complementary brands. Conforama envisages that the enlarged retail offer would benefit both sets of customers in furniture and household goods and electronics, providing a seamless solution for each room of the home. Furthermore, the transaction will create an exciting opportunity for Darty management and employees to join Conforama, one of Europe's leading household goods retailers, with a strong French focus.'

Web chart - DRTY - Mar 16

Liberum Capital's Wayne Brown believes the potential offer is much more attractive, but could still move higher. He maintains his 160p target price and 'buy' rating, writing: 'While there is a risk that neither deal will close, we look more favourably on the Steinhoff deal but suspect that a bidding war or more entrants may now look at Darty. We suspect that the appetite to internationalise Steinhoff and move the group away from its domestic currency could suggest that a higher price may be achievable. We still feel a value of 160p better reflects the long term value, recovery opportunity and strategic strength of the Darty business.'

Issue Date: 02 Mar 2016