Electrical retailer to merge its Unieuro business with rival Marco Polo chain to focus on countries where it is market leader
Dixons has become the latest British retailer to retreat from international adventures, handing over a dowry of €35m (£30m) to get rid of its loss-making Italian business.
Under the deal, Dixons will merge its Unieuro business with rival Marco Polo, which is controlled by private equity firm Rhône Capital. Dixons will invest up to €10m in the new entity and leave the business with €25m. In return, Dixons will get a 15% stake in the merged business.
Sebastian James, chief executive, said the deal gave "clarity" on the future of the business which produced a loss of £4.1m on sales of £516m in the year to April. Unieuro was expected to be hived off as part of James's plan for Dixons to "stick to the knitting" – focusing on countries where it is market leader or the strong number two.
James said: "This is a terrific outcome for both Unieuro and Marco Polo, as it creates a unified force that has the potential to be at the forefront of electrical retailing in this large European market."
The release of the struggling Italian business follows Dixons' £2m disposal of Turkish operation ElectroWorld and another deal last month, when it gave a German restructuring firm €69m to take away its loss-making Pixmania electricals e-tailer. That business lost Dixons more than £250m in seven years of ownership.
Dixons shares rose nearly 6% as it said the divestment would boost its underlying earnings for the current year. The shares rose 6% to 46.7p as analysts said the terms were reasonable and James had done well to get out of the company's misadventures abroad. His plan echoes that followed by Tesco chief executive Philip Clarke, who has pulled the supermarket out of the US and Japan and organised a merger in China as he tries to tackle problems at home.
Nick Bubb, an independent retail analyst said: "This is what people have been waiting for." He said Dixons could now focus on its more successful Scandinavian and UK operations, although its Greek operations were still suffering amid the country's economic problems.
He said: "The important thing now is not so much fixing Greece as making sure nothing else goes wrong." Dixons faces strong competition in Scandinavia and in the UK. Its PC World and Currys stores have performed well in the past year when they have benefited from the collapse of rival Comet in November last year. Bubb said: "After the anniversary of Comet's demise next month, Dixons will need to show it can build on that and it should be helped by the stronger housing market."
Dixons RetailRetail industryItalyEuropeSarah Butlertheguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds |
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