After a reported round of discussions with CVC Partners and potential strategic investors such as Galeries Lafayette, another private equity fund, PAI Partners, has agreed in principle to take over the 68 percent stake in Vivarte that had been tendered a few months ago by Jean-Louis Descours and 2-3 investment groups, notably NR Atticus and Guy Wyser-Pratte. PAI Partners, a fund set up by former managers of the BNP-Paris bank, has entered a round of exclusive takeover negotiations, on the basis of an indicative share price of €40, that should be completed around mid-February.
Descours, who is now nearly 87 years old, ran Vivarte for several decades, while it was still called Groupe André. Led by Nathaniel Rothschild, NR Atticus and Wyser-Pratte acquired large shareholdings in the midst of a major proxy fight in April of 2000, with the idea of cashing out after 4 years or so. However, the price agreed with PAI is said to be only slightly higher than what they must have paid at the time. It’s very similar to the closing price of €39.90 before the announcement, which reflected largely the analysts’ speculation about the purchase price.
Over the last 6 months or so, Vivarte’s share price had remained around €35, in spite of drastic restructuring measures that have started to pay off recently. The price agreed by PAI values Vivarte at about €1.24 billion, against an annual turnover of €1.92 billion. While Vivarte’s sales have not been very buoyant lately, its operating margin continued to increase in the past financial year to 7.7 percent from 7.1 percent in the previous year.
In a preliminary statement, Vivarte announces a 1.6 percent sales increase to €494.8 million for the 1st quarter ended Nov. 11. On a same-store basis, the French retail group recorded a rise of only 0.1 percent because of lackluster consumption patterns, particularly in September and November. The lower-priced suburban stores fared a bit better than the urban stores, recording sales increases of 2.3 percent in absolute terms and 0.5 percent in terms of comparable stores. Among the various banners, Minelli enjoyed strong growth, whereas Fosco in Spain suffered a declined.