Germany's Ceconomy enters France with $526 million Fnac Darty stake

BERLIN/PARIS (Reuters) - German consumer electronics retailer Ceconomy CECG.DE will become the largest shareholder in French music and book retailer Fnac Darty FNAC.PA, marking its entry into France just weeks after it was spun off from Metro.

Ceconomy said on Wednesday it had signed a deal 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 ($526 million) in cash, or 70 euros a share.

Pieter Haas, Ceconomy’s chief executive, said the investment allowed the company to “gain exposure to the highly attractive French market and its particularly strong consumer electronics segment.”

France is one of the few major European markets where Ceconomy, which runs stores under the Media Markt and Saturn brands, has no presence.

Fnac shares were up 4.7 percent at 79.08 euros by 1055 GMT as some analysts speculated Ceconomy might eventually buy the rest of the French company. Ceconomy’s shares were 8.4 percent higher at 10 euros.

“This deal clearly indicates that Ceconomy plans more exposure in this market and intends to be the consolidator of the continental European electronics market,” Raymond James analysts said in a note, reiterating a “strong buy” rating on Ceconomy shares.

“After a six-month lock-up, starting mid-July 2017, Ceconomy will be able to dispose of a 9 percent stake in Metro WFS (the rest of Metro). The market is more than likely to believe that Ceconomy will try to acquire further control when financial resources are freed up, and we believe that Fnac Darty has become more obvious prey as of today’s transaction,” they added.

A spokeswoman for Ceconomy said it was “comfortable” with a 24 percent stake at present.

Fnac Darty has more than 660 stores and with sales of over 7 billion euros is France’s biggest consumer electronics retailer with a market share of 23 percent, Ceconomy said.

The move comes just a week after former Fnac Darty CEO Alexandre Bompard, who led Fnac's recovery, left the company to take the top seat at French retailer Carrefour CARR.PA.

Bompard, who was brought in by the Pinault family, had led Fnac since January 2011. Fnac shares have nearly tripled in value since its stock market listing in 2013.

Artemis's other assets range from luxury group Kering PRTP.PA to auction house Christie's and Bordeaux wine Chateau Latour.

Ceconomy is Europe's biggest consumer electronics group, ahead of Britain's Dixons Carphone DC.L, running more than 1,000 stores in 15 European countries and with sales of 22 billion euros in the 2015/16 financial year.

The deal for Artemis’ entire stake in Fnac Darty should be completed by the end of August and Ceconomy expects to retain its investment grade credit rating, it said.

Metro split into two separate companies - Ceconomy and its food business - earlier this month and at the time said Ceconomy would drive consolidation in Europe.

The purchase price may change should Metro or one of its units make a public takeover offer for Fnac Darty within two years.

Reporting by Victoria Bryan, additional reporting by Dominique Vidalon and Pascale Denis; Editing by Maria Sheahan and Mark Potter