Fnac makes £533m takeover offer for Darty as it seeks to create French electronics giants

 
Kasmira Jefford
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Shares jumped as much as 17 per cent after the offer (Source: Getty)

French electronics and music retailer Fnac has made a takeover bid for Darty in a deal that would value its UK-listed rival at £533m.

Shares in Darty have soared as much as 17 per cent this morning after Fnac confirmed it has made an offer of 101p per share, 25 per cent above yesterday’s closing price of 81p.

"The board has considered the proposal and concluded that it should further explore the benefits of a potential combination with Fnac," Darty said in a statement.

"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."

Darty is Europe's third-largest electrical goods retailer with some 400 stores in Europe and earns 70 per cent of its revenue in the French market.

It was created when Kingfisher decided to spin-off its French subsidiary Kesa Electricals in 2003, which also including the UK electronics chain Comet.

In 2011 Kesa sold Comet with a £50m dowry to buy-out group Opcapita after failing to turn the chain around. The business later collapsed into administration, with thousands of staff losing their jobs. Kesa was renamed Darty in 2012 after the French arm of its business.

The company has struggled amid tough trading conditions in France and last year saw retail profit drop 12 per cent to €74.9m.

Fnac, which sells books as well as DVDs, CDs and consumer electronics, has around 184 stores in France and six other countries including Portugal and Switzerland. The group had revenues of €3.9bn in 2014.

The Paris-listed company said the deal represents a “major strategic and financial opportunity for both businesses by creating a leader in the French electronics, editorial and home appliances retail market."

Activist investor Knight Vinke, which owns a 14.4 per cent stake in Darty, has backed the offer, saying it "strongly supports the principle of combining Darty with Fnac, and encourages both sides to pursue their discussions in good faith.”

Shares in Fnac were down three per cent this morning at €51.30.

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