City analyst slams Fnac's bid for Darty and warns firm may have to sweeten deal

 
Kasmira Jefford
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Alexandre Bompard is chairman and chief executive at Fnac (Source: Getty)

A leading City analyst yesterday spoke out against Fnac’s bid for electronics rival Darty, saying the proposed offer significantly undervalued the company.

The French electronics and music retailer made an offer of 101p per share for Darty on Wednesday, in a deal that would value its UK-listed rival at £533m.

Fnac said its offer represented a 27.4 per cent premium over Darty’s Monday closing price. In addition, shareholders would be entitled to a final dividend of 2.625 cents payable next month.

Read more: Fnac makes £533m takeover offer for Darty

However, boutique investment bank Liberum said the deal “was not good enough” and suggested that Fnac might have to sweeten its bid by including a cash portion.

“The structure of the proposed offer does not deliver fair value to all shareholders. It also precludes Darty shareholders from benefiting in line with Fnac shareholders any future cost or revenue synergies,” retail analyst Wayne Brown said.

“We see a higher price, a full or partial cash altern­ative and even possibly a dual London listing as some of the remedies for us to alter our view that this deal is not in the interests of all shareholders,” Brown added after upgrading his target price for the stock from 100p to 160p.

Shares in Darty fell by one per cent last night after rising 16 per cent on the news of the offer on Wednesday.

Darty said that its board has considered the proposal and concluded it should further explore the benefits of a tie-up with Fnac. Activist investor Knight Vinke, which owns a 14.4 per cent stake in Darty, has also backed the offer.