Carrefour board to discuss spin-off plans: sources
PARIS (Reuters) - The board of the world's second-biggest retailer, Carrefour (CARR.PA), is meeting on Tuesday to discuss plans to spin off 25 percent of Carrefour Property and 100 percent of its Dia discount unit in a bid to revive its share price, sources close to the situation said.
Carrefour, undermined by two profit warnings last year, may subsequently list the property business in Paris and Dia on the Madrid stock exchange, one of the sources told Reuters.
Carrefour Property had a gross asset value of 11 billion euros ($15.2 billion) in 2009, almost half of the group's market capitalization, while analysts value Dia at between 3.5 billion euros and 4.0 billion.
The listings will happen if Carrefour shareholders approve the spin-offs in June, the source said.
"The spin-off is the most logical option because there are limited synergies (between the property business and Carrefour) and a spin-off is easier to manage than a direct IPO," the source said.
Speculation has been mounting in recent weeks that the French retailer might look to sell or spin off assets in an attempt to revive its share price after the profit warnings, and placate major shareholders who feel the group's value is not reflected in its share price.
Some analysts have said such a move would reduce Carrefour's control over its property assets and have questioned whether it will make a big difference to its valuation and share price.
"In our view, true value creation for Carrefour will only be achieved via long-term sustainable improvement of the underlying business," Credit Suisse analysts said in a research note.
They said French rival Casino (CASP.PA), which also has stakes in several listed companies, trades at an approximate 30 percent discount to their "sum-of-its-parts" valuation because of its conglomerate status, and a similar discount for Carrefour would suggest little benefit from spinning off assets.
Carrefour said last month it was considering listing some assets though it pledged to retain control of Carrefour Property, its European real estate arm.
It has declined further comment.
Carrefour has the third hard discount name in the world behind Aldi and Lidl through the Dia banner, inherited from the merger with Promodes in 1999.
Spain and France represent 60 percent of the division's stores, and sales in Spain are by far the most profitable.
The Dia hard discount stores made 11 percent of Carrefour's 2009 sales and 7 percent of its profits.
Colony Capital and Groupe Arnault, which hold 13.5 percent of Carrefour, are still down on their 2007 investment, which was made at about 50 euros a share.
After peaking at 41.28 euros in September, Carrefour dropped to as low as 30.85 euros earlier this year.
At 1349 GMT, the shares were up 0.5 percent at 35.755 euros, giving Carrefour a market capitalization of 24 billion euros.
Carrefour is due to unveil its 2010 earnings on March 3.
(Additional reporting by Pascale Denis in Paris and Mark Potter in London; Editing by Louise Heavens)
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