Stellenbosch-based Steinhoff International has made a £662m bid for electrical retailer Darty, the second stealth play in as many weeks, cementing its reputation in the European market as a “notably disruptive figure” in would be corporate mergers. The offer – made by Steinhoff’s Conforama – puts a lower competing share and cash offer from Groupe Fnac on the line, despite the agreement being in place since November 2015.
This move comes just two weeks after Steinhoff’s sneaky £1.4bn offer to buy the UK’s Home Retail Group trumped UK-retailer Sainsbury’s £1.3bn offer for same.
Conforama’s 125p per share, all-cash offer saw the Darty shares rocket 13% in intraday trade, seeing shares selling as high as 129p.
Darty boasts more than 400 stores, more than half of which are in France. The group also operates online retail platforms such as Mistergooddeal.com.
Business Day reports that Steinhoff may have to rely on its reputation for being an opportunistic and astute dealmaker to win over those who do not see the rationale of a furniture retailer buying an electrical goods retailer.
It goes on to quote Andreas Riemann, analyst with Commerzbank who said he could not see the immediate rationale behind the bid for Darty, but conceded that the group had a good track record with acquisitions.
"Operating margins did not suffer from acquisitions in the past," Mr Riemann said.
Mark Hodgson, an analyst at Avior, said Steinhoff’s size was an advantage as it was bigger than both Sainsbury’s and Groupe Fnac. At a market value of EUR20.4bn, it is around four times the market value of Sainsbury’s, and 20 times that of Fnac.
So why wait until now to make it’s move on both Darty and the earlier Home Retail Group deals?
The UK’s Telegraph reports that Steinhoff’s dual Johannesburg-Frankfurt stock exchange listing was finally agreed in December – the culmination of four year’s work. No small feat in such a volatile market. This listing gives Steinhoff exposure to more European opportunities.
However, with the Frankfurt listing secured, Steinhoff’s French subsidiary Conforama was given the all-clear by the board to ramp up preparatory work on a Darty bid.
The Telegraph states that with €2.8bn of cash sitting on its balance sheet Steinhoff can easily afford to buy both Argos and Darty and is unlikely to stop there.