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France:Fashion house Pinault-Printemps-Redoute
plans withdrawal from equipment distributor Rexel |
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2004-12-2
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Owner of fashion brands like Gucci and Yves Saint Laurent, Pinault-Printemps-Redoute (PPR) informed Tuesday of it plans to sell its stake in the equipment parts distributor Rexel.
The deal will earn the company 3.7 billion euros, or $4.9 billion and help PPR to pay up a part of 3 billion euros in debt, and focus on the luxury goods and retail markets. Meanwhile, Investors questioned the company''s moves in recent months after the famed breakup between it and Tom Ford, its well-known designer.
The Clayton, Dubilier & Rice private investment firm; Merrill Lynch Global Private Equity; and Eurazeo, the French financial company, are buying Pinault-Printemps''s 73.5 percent stake in Rexel for 1.9 billion euros, or 38.50 euros a share, and plan to offer the same share price to Rexel''s remaining equity holders. The private equity consortium will also assume about 1.1 billion euros in debt.
Rexel provides electrical supplies - including wire, lighting and tools - through 1,700 branches in 29 countries to consumers, businesses and the trade. It had sales of 6.68 billion euros in 2003 and net income of 76 million euros.
Clayton, Dubilier & Rice, which has 29 partners including John F. Welch Jr., the former chief executive of General Electric, plans to accelerate Rexel''s acquisition strategy, one partner, Roberto Quarta, said in an interview.
Rexel has already been successful at small "bolt-on" acquisitions, Mr. Quarta said. "We would encourage them to do more," and would look at some larger, company-transforming acquisitions, he said. The Dutch electrical supplies company Hagemeyer, which Clayton, Dubilier & Rice tried to buy last year, is a possibility, he said.
Serge Weinberg, chairman of Pinault-Printemps''s management board, said he anticipated the transaction would be completed within the next few weeks. The sale represents "the final step in PPR''s strategy of focusing on the individual customer and reinforcing our leading positions in retail and luxury goods," Mr. Weinberg said, referring to the company by its acronym. The offer values Rexel at 15 times its 2003 operating profit.
Clayton, Dubilier & Rice has invested more than $5 billion of its own capital since it was started in 1978. The company bought the water softener manufacturer Culligan this year, and sold the copy-store giant Kinko''s in 2003.
Pinault-Printemps-Redoute''s stock closed up 3.44 percent on the news, to 78.2 euros, on the Paris stock exchange. |
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