London - Groupe Fnac SA raised its offer for French electronics retailer Darty to 900 million pounds ($1.3 billion) in a final effort to stave off rival suitor Steinhoff International Holdings NV.
Fnac, which sells consumer electronics, books, videos and music, said investors would receive 170 pence a share in cash, raising its bid from 153 pence. The company has traded blows with Steinhoff, which last week upped its terms to 160 pence a share. The South African retailer plans to raise the bidding again, according to two people familiar with the matter.
Both suitors have raised their bids numerous times for a business that leads the French market for items such as refrigerators and televisions, but is little known outside its home. The rapid-fire nature of the contest is unusual in the procedural world of takeovers and shows how both companies recognise the need to get bigger in a market under pressure from online retailers like Amazon.com Inc. Steinhoff said it’s considering its options after the new bid.
“There’s a greater than 50 percent chance that they’ll come back with a slightly higher offer,” said Mark Hodgson, an analyst at Avior Capital Markets in Cape Town. “There are enough reasons to make it an attractive fit.”
Darty gains
Darty shares rose 5.4 percent to 171.75 pence in London, above the offer. Fnac fell 1.2 percent to 53.95 euros in Paris. Steinhoff gained 0.4 percent to 5.25 euros in Frankfurt.
Fnac said it now speaks for Darty shares representing 40.4 percent of the total, either through shares it has purchased or indications of support for its offer. Steinhoff has said investment managers have sold it about 19.5 percent of Darty’s shares.
The latest bid includes a partial share alternative of 1 share for every 25 Darty shares.
For Steinhoff, acquiring Darty’s 400 outlets would continue a takeover spree that included the 2011 purchase of French furniture chain Conforama. Fnac may need the deal more as it has fewer alternatives for consolidation.
“If Fnac gets left very clearly as the No. 2 store-based retailer in the French market, then maybe the opportunity cost of not being there, of trying to avoid that position, is something worth going for,” said Charles Allen, an analyst at Bloomberg Intelligence.
Synergy targets
The auction began last year when Fnac made a proposal that Darty rejected as being too low. It came back with a bid of 101 pence a share, and got Darty’s board to agree at 116 pence. Steinhoff crashed the party in March with an offer at 125 pence a share.
Buying Darty would triple Fnac’s number of stores to about 600. By combining, the retailers would get cost savings and additional sales of at least 130 million euros ($147 million) annually, Fnac has forecast.
“If they can achieve their synergy target then the uplift in profitability is really quite significant and may well justify what they’re saying and doing,” Allen said.
* With assistance from Liezel Hill and Phil Serafino
BLOOMBERG