Marionnard agrees to Hong Kong takeover

14th January 2005, Comments 0 comments

PARIS, Jan 14 (AFP) - The retail unit of Hong Kong conglomerate Hutchison Whampoa launched a bid Friday to take over troubled French toiletries retailer Marionnaud in a EUR 900 million deal that could create the biggest company in the sector.

PARIS, Jan 14 (AFP) - The retail unit of Hong Kong conglomerate Hutchison Whampoa launched a bid Friday to take over troubled French toiletries retailer Marionnaud in a EUR 900 million deal that could create the biggest company in the sector.

Completion of the transaction will bring the number of health and beauty stores of Hutchison's Watson unit to over 5,662, making it the world's largest retail company in the sector.

Watson said it was offering EUR 21.80 per share for all of Marionnaud's capital, valuing the company at EUR 534 million (USD 700 million).

However, after paying off Marionnaud's debt, Watson will have paid EUR 900 million for the chain of stores specialised in perfumes and cosmetics.

Marionnaud's fate has been the subject of much speculation since it announced last month that it had millions of euros in accounting errors, sparking a collapse in its share price and a probe from regulators.

The Hong Kong-based company had been in talks to acquire Marionnaud for the past several days, with progress having been hindered by a disagreement on the bid price, union officials had said.

Watson - part of the empire of Asia's richest man, Hong Kong tycoon Li Ka-shing - said the offer had been accepted by Marionnaud's main shareholders, the founding Frydman family and French bank Credit Agricole, which together control 31 percent of the company's capital.

Watson's managing director Ian Wade said that Belgian financier Albert Frere, who recently took a five percent stake in Marionnaud, considered the bid to be "friendly".

If the bid were successful, Marionnaud's founder and chief executive Marcel Frydman would stay on.

However, an association small shareholders said the offer was too low and advised shareholders not to sell up to Watson. It said that the share could be worth 35 to 40 euros in two or three years time.

But Watson's Wade, who aims to pull the deal off by the end of March, said the proposed offer was "very attractive" and that there was no other company was likely to make a better bid.

Marionnaud saw more than a third of its stock market value wiped out in one day last month after it reported - two months late - a first-half net loss of EUR 78.96 million compared with a profit of 6.37 million a year earlier, blaming the heavy loss on changes in the accounting method and "correction of errors."

Struggling under debts of EUR 459 million, Frydman sought to ease concerns that that the company could honor its financial obligations.

Then at the beginning of the month the French financial markets regulator AMF said it had opened a probe into Marionnaud's accounts as small shareholders associations had urged.

Watson, which stands to acquire 1,300 Marionnaud outlets in Europe, 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.

Watson said Marionnaud appeared to be natural fit because it did not yet operate in France, or in most of the other key markets of Marionnaud, including Italy, Spain, and Austria.

It also said that job cuts were not planned although several stores would be closed.

© AFP

Subject: French News

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