Steinhoff Says Participating in PPR Disposal of Furniture Chain Conforama
Steinhoff International Holdings Ltd., Africa’s largest furniture maker, said it’s among bidders for PPR SA’s Conforama chain to expand in Europe.
Conforama, which has been valued by Sanford C. Bernstein analysts at about 1.3 billion euros ($1.7 billion), is “exactly up our alley,” Chief Executive Officer Markus Jooste said in an interview at Steinhoff’s Johannesburg headquarters today after the company’s annual general meeting. “I’d love to have it.”
Conforama is France’s second-largest furniture retailer behind Ikea and also has stores in Switzerland, Luxembourg, Spain, Portugal, Italy and Croatia. PPR, the owner of brands including Puma and Gucci, is seeking to dispose of retail units including the Fnac music and video stores and mail-order company Redcats to focus on its luxury and lifestyle businesses.
Buying Conforama would be “a quantum leap” for Steinhoff’s discount retailing business, Syd Vianello, a retail analyst with Nedcor Securities, said in an interview.
Steinhoff has been “invited to participate” in the Conforama sale process, Jooste said. He and other Steinhoff management went to France over the weekend and attended Conforama presentations on the business and were given an “information memorandum,” he said.
PPR has started talks with Steinhoff and other investors about a sale, Charlotte Judet, a company spokeswoman, said in an e-mailed response to questions. She declined to comment further.
PPR dropped 70 cents, or 0.6 percent, to 125.15 euros at 4:20 p.m. in Paris trading. Steinhoff shares were down 0.4 percent at 21.90 rand at the 5 p.m. close in Johannesburg, giving the company a market value of 33.6 billion rand ($4.9 billion).
“It will make them one of the biggest in all the geographies in Europe,” said Vianello, who has a “hold” recommendation on the stock. “They are already the leader in Germany, the only country they won’t be in is Italy.”
Steinhoff won’t offer “an unrealistic price” and losing the bid wouldn’t be “the end of the world,” he said.
Steinhoff operates more than 50 factories in countries such as Poland, the Netherlands, Australia and South Africa. It has more than 1,100 retail outlets, more than half of which are in the U.K. and include stores such as Bensons for Beds and Harveys. In continental Europe, the company sells the Hukla, Esprit, Sit & More and designwerk brands.
Jooste declined to comment on a timeline for a possible purchase of Conforama or give more details of the discussions. It’s too early to discuss how an acquisition would be funded, he said, adding that Steinhoff has cash resources.
Conforama’s earnings before interest, taxes, depreciation and amortization increased 32 percent to 83 million euros in the first six months of 2010 as sales rose 6.2 percent, PPR said in July. The unit will be “significantly” more profitable this year than 2009, Conforama CEO Thierry Guibert said in June.
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