PPR in talks to sell Conforama

Paris: PPR, the French luxury and retail group led by Francois-Henri Pinaultis, in exclusive talks to sell its Conforama furniture unit to South African group Steinhoff in a $1.6 billion (Dh5.88 billion) deal that would help the French company focus on sport, lifestyle and luxury.

The deal would give Steinhoff, a furniture maker and retailer, a larger presence in France, Europe's second-biggest economy and one of the largest markets for household goods on the continent.

PPR said the deal valued Conforama at €1.2 billion (Dh5.85 billion) in cash, while the working capital balance Conforama was due to pay PPR would be repaid on closing. This puts the total value of the deal for PPR at around €1.6 billion, a source familiar with the matter said.

Acquisition

For three years, PPR has been looking for buyers for Conforama and has said it plans to return to the acquisition trail once it has disposed of the business. It wants to build a sports and lifestyle unit around Puma, the German brand in which it has a 71 per cent stake.

Analysts from JPMorgan Cazenove said PPR could target Quiksilver, the maker of surfing and skateboarding clothing, for its next acquisition, sending shares of that company sharply higher in New York.

"Burberry is ‘too big a fish' for PPR in our view. We think Quiksilver could be of interest to PPR as a market leader in the lifestyle space focused on surfing, skateboarding and snowboarding."

PPR, whose Gucci Group accounts for the bulk of its valuation, also wants to sell its Fnac electronics, books, CD and DVD unit, as well as its Redcats catalogue business.

Conforama, bought by PPR in 1991, sells furniture including the €790 white Loft sofa, household appliances and decorative objects such as the €38 Leny desk lamp. It has around 180 stores in France, which generate 70 per cent of sales.