Johannesburg - Steinhoff International Holdings said it won’t raise its offer for French electronics retailer Darty, handing victory to Groupe Fnac and marking its second retreat from a takeover battle in as many months.
Steinhoff’s offer of 160 pence a share in cash is final and won’t be increased, the South African company said in a statement Wednesday. Fnac raised its offer to 170 pence a share earlier this week and said Tuesday it now speaks for 51.8 percent of Darty shares.
“Steinhoff’s pursuit for retail consolidation looks like it will take a pause for breath,” Exane BNP Paribas analyst Graham Renwick said in a note. “While we believe the Darty deal had strategic merits and would have created value for Steinhoff below 160 pence, their decision to walk away reflects strong capital discipline.”
Steinhoff, led by CEO Markus Jooste and South African billionaire Christo Wiese, has now backed out of two retail auctions this year. In March, it ditched its pursuit of Britain’s Home Retail Group, allowing J Sainsbury to win the owner of the Argos general-merchandise chain. The dual retreats complicate Steinhoff’s ambition to expand in Europe and challenge the likes of Sweden’s Ikea.
Read also: Fnac raises Darty bid again
Fnac rose 0.8 percent to 54.69 euros at 10:21 a.m. in Paris. Darty fell 0.3 percent to 168.25 pence, while Steinhoff rose 1.1 percent in Frankfurt.
Fnac’s tussle with Steinhoff bore the hallmarks of a cattle auction, with each side increasing their offers several times, sometimes within minutes of each other. Fnac’s latest offer values Darty at 914 million pounds ($1.3 billion) and includes a partial share alternative of 1 share for every 25 Darty shares. The French retailer may have needed the deal more than Steinhoff as it has fewer alternatives for consolidation.
Cost savings
“Our independent board and management had a clear valuation in mind for the standalone Darty business,” Alexander Nodale, CEO of Steinhoff’s Conforama unit, said in the statement. At a higher price “it would no longer create sufficient value for Steinhoff shareholders, employees and other stakeholders.”
By combining, the retailers would get cost savings and additional sales of at least 130 million euros ($147 million) annually, Fnac has said.
Read also: Steinhoff raises Darty stake to 20.4%
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.
-With assistance from Liezel Hill and Phil Serafino.