French book and cd seller Fnac has increased its bid for electronics chain Darty in an attempt to ward of competitor Steinhoff.
Competition sparks price war
At first, it seemed Fnac would acquire Darty easily, but South African Steinhoff appeared as an unlikely competitor. That group, whose European activities mostly revolve around British bed specialist Bensons for Beds and French furniture chain Conforama, also entered the bidding process for Darty.
The competition has raised Darty's price considerably now: at first, Fnac offered a combination of cash and shares, worth 1.2 pounds per share. Steinhoff countered with a 1.25 pound per share bid, entirely in cash, and raised that to 1.38 pounds per share. In total, the deal would be worth 742 million pounds at this point.
However, Fnac refuses to back down and has now raised its own bid to 1.45 pounds per share, for a total of 779 million pounds (990 million euro). Darty's shareholders will be able to choose to be paid in cash or to acquire Fnac shares. For every 125 shares in Darty, shareholders would acquire 4 shares in Fnac.
Fnac expects higher synergy
Knight Vinke Asset Management and DNCA Finance, two major shareholders in Darty, have both backed Fnac's offer and have promised to exchange 22 % of Darty's shares into Fnac shares. This trumps Steinhoff subsidiary Conforama's share, currently at 19.5 %.
Fnac explains its higher bid by pointing out that a new study has shown increased synergy advantages, like when both companies purchase together. Instead of 82 million euro, these advantages would now amount to 130 million euro every year. On top of that, Fnac just raised its capital, thanks to a 15 % share for Vivendi in return for 159 million euro.
Acquisition target Darty currently has more than 400 electronics stores and online shops. It uses different names, depending on the region: Darty or Mistergooddeal.com in France, Vanden Borre (with 60 stores) in Belgium and BCC (with 75 stores) in the Netherlands.