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France's Fnac increases bid for Darty

BBC News BBC News 25/04/2016
Sign showing Darty logo © Getty Images Sign showing Darty logo

French retailer Fnac has stepped up its effort to buy the electronics firm Darty, with its third and "final" bid.

Sign showing Darty logo © Getty Images Sign showing Darty logo

Fnac said it had already secured the backing of 41.05% of Darty shareholders for the £913m ($1.3bn) bid.

Fnac has been competing with South Africa's Steinhoff to buy the company. The two firms issued five competing offers for Darty in less than 24 hours late last week.

Darty's shares rose 5% on Monday, closing above the offer price.

They closed at 171.75p - their highest level since late June 2008 - suggesting that investors think the bidding war may continue. The latest offer values Darty at 170p per share.

Since Fnac's first bid in September, Darty's market capitalisation - its value to shareholders - has more than doubled.

Steinhoff says it is again considering its options after Fnac's latest offer.

Bidding war

Steinhoff is listed in both Frankfurt and Johannesburg, and is currently worth £15.6bn. It already owns French brand Conforama, with 200 home furnishing stores in France and elsewhere in Europe.

As the South African retail market sags, a purchase of Darty would help strengthen these European operations, which already account for more than two thirds of its £7.6bn in annual global sales.

The company has previously abandoned a bid for the UK's Home Retail Group, the owner of Argos.

The purchase would give Steinhoff, "some critical mass in electronics and also a good internet-based retail facility, which enhances their own online capability," according to Mark Hodgson, an industrial analyst at Avior Capital Markets in Cape Town.

"I think it's reaching a point where there's not much upside for either party, but obviously somebody's got to blink first."

Fnac's retail focus is on selling books, music and electronics, and the firm says Darty's 400 household electronics stores across Europe would successfully complement its existing businesses and provide significant cost savings.

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