Hong Kong tycoon eyes France's Marionnaud

12th January 2005, Comments 0 comments

PARIS, Jan 12 (AFP) - Watson, the retail arm of Hong Kong tycoon Li Ka-shing's Hutchison Whampoa, is in takeover talks with troubled French toiletries retailer Marionnaud Perfumeries - but not at the price Marionnaud's chairman is asking, a source close to the matter said Wednesday.

PARIS, Jan 12 (AFP) - Watson, the retail arm of Hong Kong tycoon Li Ka-shing's Hutchison Whampoa, is in takeover talks with troubled French toiletries retailer Marionnaud Perfumeries - but not at the price Marionnaud's chairman is asking, a source close to the matter said Wednesday.

Earlier, French newspaper Les Echos claimed in an unsourced report that Li was prepared to pay EUR 21.80 (USD 28.63) per share, but that was denied by the source close to the matter.

Li "isn't ready to pay EUR 21.80 per share," the source told AFP.

That price represents a 25 percent premium over the price of the share when it last traded before its suspension Tuesday.

Marionnaud shares have been suspended from trading since early Tuesday, pending a statement from the company about a "financial operation".

On December 17, Marionnaud reported a first-half net loss of EUR 78.96 million compared with a profit of EUR 6.37 million a year earlier, blaming the heavy loss on changes in the accounting method and "correction of errors".

Before taking into account the corrections, Marionnaud said it had made an operating loss of EUR 1.2 million after a profit of EUR 23 million a year earlier.

Debt stood at EUR 576 million at end-June 2004, equal to 128 percent of shareholders' funds and in breach of banking covenants stipulating Marionnaud's debt should not exceed 100 percent of equity.

Marionnaud chairman Marcel Frydman and his family own nearly 22 percent of Marionnaud's shares and hold 35 percent of the voting rights, constituting a blocking minority.

Frydman has said he is not averse to an amicable approach from a financial bidder or one from within the sector.

Late last month, Belgian financier Albert Frere bought a five percent stake, and Frydman said he would meet with Frere early this month.

"The deal undoubtedly will be done with Watson, but it's hung up on the price," the source close to the deal said.

"The Chinese are very sharp in business and they know very well that Marionnaud is backed up against the wall. What interests Watson is the company, not its results. Thus it's not going... to pore over the books line by line."

With the acquisition of Marionnaud, Watson would become the world's leading perfume distributor, the source said, noting that Watson was trying to buy a perfume retail chain in Russia.

Watson already owns several toiletries and cosmetics chains in Europe, such as Superdrug and Savers in Britain and Ici Paris XL in Belgium and the Netherlands.

Comment from Marionnaud was not immediately available.

© AFP

Subject: French News

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