DIXONS, Europe’s leading electrical retailer, has moved to take a controlling interest in Greece’s top electrical stores chain.
The company announced it had agreed to purchase 38.7 per cent of Kotsovolos for £36 million.
This brings its total stake in the company to a controlling 52.3 per cent share, although the deal is subject to certain conditions, including clearance by the competition authorities.
Kotsovolos trades in Greece under the Kotsovolos, Radio Athinai and One Way brands. The company employs 1700 people and trades from 77 stand-alone stores and 50 concessions.
The purchase values the company’s shares at about £4.30 a share, a 28 per cent premium on its average share price.
In a statement, Dixons said the acquisition added a “complementary business” with “growth potential” to the Dixons Group.
During the past year, the Greek company made a pre-tax profit of £2.3m on sales of £245m. Its net assets were calculated at £59m.
Dixons will purchase the shares from the Fourlis Group, made up of Fourlis Holding and Fourlis Trade, as well as the Paravalos Marinos Group.
For a transitional period, Fourlis will retain a 20 per cent stake in Kotsovolos, which Dixons Group will have the right to acquire after five years.
Under Greek law, if the share sale goes through, Dixons will be required to make an offer for the remaining stake in the company, known as a mandatory public tender. If accepted, it would value the total deal at £61m.
Two weeks ago, Dixons unveiled a jump in profits and plans for creating 2000 jobs in the coming year, including more than 100 in Scotland.
Pre-tax profits were up 33 per cent to £366.2m, helped by rising sales at Currys and PC World. This was due in no small part to sales of LCD and plasma television screens, boosted by Euro 2004 and the Athens Olympics.
However, sales at its Dixons-branded stores fell, and the firm warned that UK trade could be hit by higher interest rates. It recently axed 100 loss-making stores after disappointing sales, and is
trying out new formats including out-of-town outlets.
Europe has become an increasingly important market for Dixons, and that importance could soon be amplified by further problems in the electronics giant’s home market.
Rising interest rates, housing market fears and tough high street competition are all concerns in the UK. Europe, by comparison, looks a land of opportunity.
The chain is also facing stiff competition from catalogue retailer Argos, supermarket giants such as Tesco and Asda, and online retailers.
Analyst Rhys Williams of stockbroker Seymour Pierce said the deal was positive news as it added another European market to the Dixons group. But he added: “The UK remains the dominant operation, and trade, we believe, remains difficult.”
From The Scotsman, Business