France’s PPR plans to sell furniture unit Conforama for $1.6 bn
13 Dec 2010
French luxury goods giant PPR has begun exclusive talks with South Africa's largest household goods company Steinhoff International Holdings Ltd for the sale of its home furnishing business Conforama for approximately €1.2 billion ($1.6 billion) in cash.
Confirming the negotiations with Steinhoff, PPR chairman and CEO Francois-Henri Pinault said in a statement, ''This planned cession to a global furniture sector player is a major strategic opportunity for Conforama. This proposed offer would reflect a strategic valuation recognising the true value of the company, its brand, and the work achieved by the team.''
The current move is line with the company's strategy pursued since 2005, to improve its position in global luxury, sports, and lifestyle brands and disposing of less lucrative businesses, PPR said.
Paris-based PPF owns a portfolio of high-growth global brands of consumer and luxury goods. The group has presence in 60 countries with around 73,000 employees, and reported sales of €16.5 billion in 2009. The Euronext Paris-listed PPR's main brands include Fnac, Redcats, Puma, Conforama, and the luxury brands of Gucci group.
Conforama is one of the largest European retailers of home furnishing with a turnover of €2.9 billion in 2009. It operates 241 stores of which 190 are in France and the remaining 51 located in Italy, Switzerland, Spain, Croatia, Portugal, and Luxembourg. The business employs around 13,400 people and offers one-stop shopping covering a wide range of home products through its stores as well as online.
Johannesburg-listed Steinhoff is a holding company invested primarily in household goods and diversified related industries. The company is one of the largest furniture and household goods suppliers in Europe, apart from its operations in South Africa and Asia-Pacific region. The company employs around 41,000 people and reported a turnover of €4.5 billion for the year ended June 2010.
Steinhoff's chief executive officer Markus Jooste, says, ''Should this transaction be concluded, it will allow us to reinforce our position as one of Europe's leading integrated furniture and household goods companies by giving us access to key markets such as France, one of Europe's largest household goods markets, and other territories where Conforama operates.''
PPR stated that the transaction should be concluded in the next weeks, subject to consultations and required approvals. Steinhoff shareholders representing over 50 per cent of the company's equity have undertaken to vote in favour of the deal, the statement said.
