Bloomberg News

Kesa May Sell More Assets After Sale to Bouygues Telecom

May 03, 2012

Kesa Electricals Plc (KESA), owner of the Darty chain, will consider more disposals and tie-ups after selling a unit today to Bouygues SA (EN) as it seeks to cut costs in France, Chief Executive Officer Thierry Falque-Pierrotin said.

“It makes sense for me to partner with the best people in order to provide the best services and an enlarged offer,” the Frenchman said in a phone interview from Paris. Additional deals “could happen in the future,” he said.

Kesa will save as much as 15 million euros ($19.7 million) a year after Bouygues, France’s third-largest mobile-phone operator, agreed to pay 40 million euros for a 99.9 percent stake in Internet provider Darty Telecom. Kesa will continue to receive revenue from existing and new subscribers and from services like its call-center and installation, while Bouygues will give customer access to its Internet and mobile network.

London-based Kesa, which sold its U.K. Comet chain earlier this year, has been struggling with a waning French market, where unemployment is at a 12-year high. Earnings before interest and tax probably fell 29 percent in the year ended April as pressures on French consumer curb spending on consumer electronics, according to 10 analysts surveyed by Bloomberg.

“Although the price is marginally below our expectations the ongoing revenue and evidence of further financial discipline should offset this,” UBS AG analyst Adam Cochrane said in a report. He has a “buy” rating on the stock.

Italian Business

Cochrane said “non-core property assets and the Italian business are likely to be under the microscope.” The retailer already has a joint venture with France Telecom SA (FTE)’s Orange mobile-phone brand and supplies energy contracts with other outside providers.

Kesa rose as much as 9.3 percent, the most since February, and was up 3.6 percent at 58 pence as of 1:38 p.m. in London.

Darty Telecom, which includes Darty Box and Darty Mobile with 340,000 subscribers, reported retail profit of 200,000 euros. Profit at the unit in the most recent period “will not be as good as we had last year because of the pressure in the French market,” Falque-Pierrotin said.

French presidential campaigns “are putting some pressure on consumption short term because everyone is looking at the future, waiting to see what’s going to happen,” the CEO said.

To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net.

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net


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