Friday, February 4, 2011

Carrefour Weighs Projects That May Lead to Separate Listing of Some Assets

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Carrefour SA, the world’s second- largest retailer, said it is studying projects that that may lead to separate listings of some assets.

The company, with the backing of shareholders including Bernard Arnault, may create stock-exchange listings for its Dia discount chain and real-estate units, Le Figaro reported earlier, without saying where it got the information. A decision hasn’t been made yet, Carrefour said today in a statement, adding that it plans to retain control of its property unit.

Carrefour rose 1.81 euros, or 5.3 percent, to 35.79 euros in Paris trading, the steepest gain since Sept. 1. The retailer has a market value of 24.3 billion euros ($33.3 billion).
An initial public offering of Dia “would make sense,” Arnaud Joly, an analyst at CA Cheuvreux, wrote today in a note, citing scope to accelerate expansion, particularly in Turkey, Brazil orArgentina, if it were managed independently of Carrefour. “For Carrefour Property, we are much more cautious” as a split risks weakening the business itself, he said.
A sale of 49 percent of Carrefour Property and Dia would raise 5 billion euros, while an IPO of 49 percent of each would be worth 7.8 euros a share, estimated Royal Bank of Scotland Group Plc analyst Justin Scarborough. Arnault, the world’s seventh-richest man in 2010 according to Forbes magazine, and Colony Capital LLC own 14 percent of Carrefour.
Brazil Write-Downs
A possible listing of the real estate unit and Dia “could demonstrate that Colony and Arnault do not entirely trust the management’s strategy to increase sales and profitability of the retail business, which is not a good sign,” said Renaud Berenguier, head of sales at CM CIC Securities.
Arnault and Colony bought a 9.8 percent stake in Carrefour for about 4 billion euros in 2007. They forced out the retailer’s Chief Executive Officer Jose Luis Duran a year later over differences about strategy and replaced him with Lars Olofsson. The shares traded at 53.90 euros a share the day before Arnault announced the stake.
The stock has fallen 11 percent in Paris trading since Oct. 14 after the retailer twice cut earnings forecasts amid writedowns at its Brazilian unit and posting a worse-than- expected performance at domestic stores. Carrefour has pledged to invest about 1.5 billion euros to revive its superstore format in western Europe, where sales are stagnating. The grocer is also refocusing its international business on markets including China and Latin America.
Major Shareholder
Colony Blue Investor, Groupe Arnault and Blue Capital, a 50-50 joint holding company, have 20.27 percent of Carrefour’s voting rights, the French market regulator said Jan. 13. They aren’t seeking control of Carrefour and support the current management’s strategy, the Autorite des Marches Financiers said at the time, citing the investors.
BNP Paribas is advising on the potential split and Carrefour will retain a stake in any business for which it creates a new listing, Le Figaro said.
To contact the reporter on this story: Andrew Roberts in Paris at
To contact the editor responsible for this story: Celeste Perri at

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