PERMIRA and Kohlberg Kravis Roberts (KKR), two leading private equity groups, are putting together a fresh joint bid for profit-hit Kesa Electricals, owner of the UK’s Comet, The Business has learned.
They are expected to deliver a revised 340p-a-share offer for Kesa, Europe’s third-largest electrical retailer, in the next few weeks, valuing the group at £1.8bn (E2.6bn, $3.2bn).
Kesa, which owns a portfolio of brands across Europe, including top French retailer Darty, shunned the previous 325p per share bid made by Permira and KKR in mid-March. Despite issuing a second profits warning in January, Kesa’s board unanimously rejected the £1.7bn offer as undervaluing the company.
The improved bid, which at 340p would only be a 5% increase on the original offer, is a reflection of Kesa’s recent 16% profit slide and the company’s promise to commit more cash to the business in the near-term.
A fresh attempt by Permira and KKR could attract rival offers for Kesa, which has 28,000 employees across Europe. The company is an attractive target because of its large property portfolio and the £200m in cash on its balance sheet.
A buyer for Kesa could realise further value by breaking the business up. It has a large portfolio of leading European brands, such as BUT, the French furniture and retail chain. Dixons is seen as a potential buyer for Darty.
Jean-Noel Labroue, Kesa’s chief executive, has vowed to battle on, despite disappointing results and a pessimistic outlook for the company. Labroue has said the group has plenty of opportunities for expansion but analysts appear more sceptical and believe Kesa’s shareholders will want the chance to evaluate any improved offer.
Trading profits at Comet have fallen from £48.7m to £38.3m after a collapse in the market for white goods such as fridges and freezers, while intense competition in France caused an 18% drop in profits at BUT.
From The Business Online