White goods retailer Darty (DRTY) is in demand on Wednesday, the shares sparking up 17.3% to 95p as French retail rival Groupe Fnac (FNAC:PA) confirms a takeover bid. The potential all-share offer values Darty at £533 million or 101p a share, a handsome 27.4% premium to yesterday's closing share price that validates Darty's new strategic direction under CEO Regis Schultz (pictured below).
Click here to read today's announcement from Groupe Fnac, a leading French consumer electronics purveyor with sales of €3.9 billion in 2014. Fnac has 114 stores in France and also operates Fnac.com, France's third biggest e-commerce site based on average unique visitors. It is also a notable player in Spain and Portugal that also boasts stores in Brazil, Belgium, Switzerland and Morocco.
Guided by chairman and CEO Alexandre Bompard, Fnac believes 'that the combination of Fnac and Darty constitutes a compelling strategic and financial opportunity for both groups by creating a leader in the French electronics, editorial and home appliances retail market'.
Besides marrying two strong brands, the new group would boast an enlarged product offering, a complementary and efficient store network and a strengthened multi-channel offering. In addition, the merger would yield significant savings and bring 'broader international exposure', with a focus on Europe, a footprint spanning seven countries and over €7 billion in combined sales.
Darty, the televisions-to-washing machines purveyor with 400 stores across France, Belgium and the Netherlands, says it has 'considered the proposal and concluded that it should further explore the benefits of a potential combination with Fnac. Initially, this engagement will focus on reviewing deal execution risks in order to determine whether an offer is likely to be deliverable on a basis which could be capable of being recommended to Darty shareholders.'
Formerly known as Kesa, Darty has been successfully and radically restructured under Schultz. Over the past few years, it has closed or sold businesses in the UK, Italy, Spain, Turkey, the Czech Republic and Slovakia and re-focused on core markets France, Belgium and the Netherlands, where Schultz is pursuing numerous growth initiatives.
Though Darty shareholders would probably welcome some cash in the mix – the proposed offer would entitle them to one Fnac share for every 39 Darty shares held – they will be allowed to keep the €2.625 cents final dividend, payable in November, should the deal go through. Significantly, the mooted offer represents a bumper 44% premium to the 70.25p at which Shares recommended Darty, a running Play of the Week, in July.