Creating a French consumer electronics retailing champion
Societe Generale finances Groupe Fnac’s EUR 1.35bn acquisition of Darty plc, bringing together two of the country’s iconic retailing brands.
In one of France’s landmark 2016 corporate mergers, Societe Generale financed Groupe Fnac’s EUR 1.35bn acquisition of Darty plc, bringing together two of the country’s iconic retailing brands. This has created a formidable competitor, with the scale and market presence to match the largest international online retailers.
The combined entity is a top 10 European electronics retailer, with sufficient strength to compete at a time when the relentless rise of e-commerce has driven several electronics retailers, in the US and in Europe, into bankruptcy. Fnac and Darty have a powerful online and store presence, trading across 10 countries. What’s more, they have a diversified product offering, including not only the full range of electrical goods but also editorial products stretching from books to DVDs.
This complex transaction’s success required close support from Societe Generale. Fnac originally approached just a few trusted advisors in July 2015. As Darty was listed on the London Stock Exchange, Fnac made sure as few people as possible were aware of its intentions to minimise the risk of a leak jeopardising its bid under the UK Takeover Code rules.
Over the nine-month takeover battle that followed, Fnac was forced to raise its offer and we swiftly supported them by increasing our funding commitment. Initially, in November 2015, Fnac and Darty announced a friendly EUR 805 million agreed transaction. However, in March 2016 a counter bidder forced Fnac to make a higher cash offer, with a share alternative. Fnac finally won the transaction in April, ahead of its official closing in July.
“This acquisition is a transforming transaction for the group, doubling its size and significantly diversifying its portfolio of products.”
Matthieu Malige, CFO of Group Fnac
Societe Generale’s ability to react quickly and to reconfirm its commitment in the midst of a dynamic takeover battle helped Fnac to cement the transaction. As well as coordinating, arranging and underwriting the financing, we acted in other critical roles such as global coordinator and bookrunner on the bond issue refinancing that followed, sole rating advisor and sole FX hedging provider & advisor for the full transaction risk. This transaction built on a long relationship with Fnac and its backers, Kering and the Pinault family. In 2013, when Kering demerged Fnac, we were bookrunner and lead arranger of the post-IPO financing.
“This acquisition is a transforming transaction for the group, doubling its size and significantly diversifying its portfolio of products,” said Matthieu Malige, CFO of Group Fnac. “It was a hard fought acquisition which required Societe Generale to react quickly to the increasing size and changing terms of the transaction. Their flexibility helped us to close the deal successfully.”
“Groupe Fnac has made itself a formidable force in Europe’s fiercely competitive retailing market with this transaction,” said Matthieu Plateau, Societe Generale, Director, Corporate Leveraged Finance. “We are proud to have supported them as their business model undergoes a successful transition and puts them in a better position to compete with international online retailers.”
Following the merger, the combined business will have sales of EUR 7.4 billion (based on 2015 data), rivalling its largest competitors. On top of France, its key markets will include Benelux and Iberia.