Why South African Group Walked Away From Buying The Good Guys
South African Company, Steinhoff International Holdings decision to walk away from spending over $800M to buy The Good Guys is believed to have driven by the fact that there were bigger fish to chase in Europe.
During the past week the Company that flew in auditors to look over The Good Guys books has mounted a major battle to snare Darty a French consumer electronics retail chain retail that operates similar to The Good Guys.
On Friday in New York the South African Group who also own Freedom Furniture in Australia, said that it had increased its stake in its takeover target Darty to just over 20 percent
The Company is in a head on bidding war with Groupe Fnac who is also after the French electronics and appliance retailer.
The announcement came a day after Conforama, Steinhoff’s French household goods retail unit, and Fnac made a series of escalating bids for Darty.
Conforama has so far made the highest bid for Darty, offering to pay US $1.2 billion.
On Friday, Conforama said that a Steinhoff unit, Steinhoff Finance Holdings, had acquired a further 4.81 million shares of Darty and now owns about 20.4 percent of the retailer.
Fnac said that it was “currently considering” its position and urged Darty’s shareholders to take no action.
The fight for Darty began in March, when Steinhoff of South Africa swooped in and offered to buy the retailer at a price that exceeded the one in a previous merger agreement with Fnac. This was when the Company chose to walk away from acquiring The Good Guys which is now looking at a float later this year or early in 2017.
Also in March, Steinhoff abandoned its pursuit of the Home Retail Group as it faced a separate and potentially lengthy battle with J Sainsbury, one of Britain’s largest grocery store chains.
It instead agreed to acquire Darty with a cash offer of 125 pence a share, or about $1.28 Billion beating Fnac at the time in a race to acquire the company.
The New York Times said that on Wednesday of last week, Conforama said it was sweetening its offer to 138 pence a share after Steinhoff Finance Holdings took a 19.4 percent stake in Darty.
The next day, Conforama and Fnac each tried to gain favour over their competitor by publicly announcing a series of escalating offers – four, in total – for the company.
Fnac eventually settled on a price of 153 pence a share on its second offer of the day, but was trumped by Conforama, which said it was willing to pay 160 pence a share, or about A$1.28b
The frantic bidding sent Darty’s shares up 23 percent for the day in London trading.