February 7, 2018 / 11:25 AM / 3 months ago

Fnac Darty shares shine as SFAM buys into consumer electronics group

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* SFAM becomes second-largest shareholder after Ceconomy

* SFAM could further increase stake but no plans to seek control

* Private equity firm Ardian buys minority stake in SFAM

* Capital reshuffling also follows Vivendi’s mid-January move

By Dominique Vidalon

PARIS, Feb 7 (Reuters) - Shares in Fnac Darty surged higher on Wednesday after French insurance broker SFAM bought 11 percent of the French consumer electronics group, spurring speculation that further capital reshuffling could be on the cards.

Fnac Darty has already been a point of interest for German retailer Ceconomy and media conglomerate Vivendi , which also have stakes in the company.

SFAM announced late on Tuesday its purchase of the stake for 335 million euros ($414 million) from long-time shareholder Knight Vinke, becoming the group’s second-biggest shareholder behind Ceconomy, which owns 24 percent.

SFAM said it could eventually increase its stake in Fnac Darty, depending on market opportunities, but did not intend to take control of the group.

Fnac Darty shares were up 5.1 percent at 93.90 in mid-session trading, leading gainers on the Paris market .

The deal was priced at an estimated 110 euros per share, represented a premium of 23 percent from Fnac Darty’s closing price of 89.15 euros, wrote brokerage Raymond James.

“We firmly believe the consumer electronics sector in Europe will continue to consolidate. Ceconomy would be the “natural” acquirer of Fnac Darty down the road, and SFAM seems to be willing to take advantage of this consolidation,” added the Raymond James analysts.

The brokerage raised its price target on Fnac Darty to 113 euros from 108 euros and reiterated a “strong buy” rating.

Another sector analyst who asked to remain anonymous said: “SFAM may want to secure a strong position ahead of a Ceconomy’s move. These movements in the capital could mean a bid is near.”

SFAM also said private equity firm Ardian had bought a minority stake in SFAM, to help fund its development plans.

Fnac Darty and Ceconomy have declined comment on the deal.

In July 2017, Ceconomy agreed to buy a 24.33 percent stake in Fnac Darty from Artemis, a French holding company owned by businessman Francois Henri Pinault, for around 452 million euros in cash, or 70 euros a share, triggering speculation it might eventually buy the rest of the French company.

SFAM’s move also comes after Societe Generale in mid-January placed 11 percent of Fnac Darty held by French media group Vivendi in an accelerated bookbuild to hedge a derivatives trade in order to protect the value of Vivendi’s stake. The pricing of that deal was set at 91 euros at the time.

Vivendi said at the time it retained the option to choose a settlement in cash or shares when the derivative contract matures, which should be during the second half of 2019 at the latest.

Vivendi declined on Wednesday to comment on the future of its stake in SFAM.

$1 = 0.8100 euros Reporting by Dominique Vidalon Additional reporting by Laetitia Volga Editing by Sudip Kar-Gupta

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