• Bolt-ons serving international expansion and keeping debt low still in sight
• Deals under EUR 50m would be funded with debt only
• No major competition hurdles identified for Unieuro EC merger review

Fnac Darty [EPA:FNAC] will keep an eye on potential new acquisitions which would enable it to enter new geographies as a market leader, even as it executes the planned takeover of Italy’s Unieuro [BIT:UNIR], Chief Financial Officer (CFO) Jean-Brieuc Le Tinier told this news service.

The French media and consumer electronics giant, which announced its proposed acquisition of the Italian electronics retailer earlier this month, has a list of smaller targets and wouldn’t exclude larger deals serving its growth strategy, he said, declining to disclose any potential targets.

“There is no detailed multi-annual plan with a precise budget and a fixed number of deals,” but the targets identified should be profitable and either help to internationally expand Fnac Darty’s network of stores, be innovative and sustainable retail experience and repair services, or bring on board complementary services for its customers, Le Tinier explained.

Potential new acquisitions will more likely happen from next year and onwards as Fnac Darty will remain busy this year completing the Unieuro takeover, he added.

Potential targets are sourced internally even though pitches from external advisors are not necessarily turned down, the CFO said, adding that M&A advisors would differ according to the geographies or the type of deals.

For the planned Unieuro takeover, at an implied EUR 249m equity valuation, Fnac Darty hired Rothschild and Credit Argicole CIB as financial advisors and Bretin Prat and Chiomenti as legal advisors, Le Tinier said.

Unieuro was identified as a potential target internally, he said, adding that Fnac Darty subsequently obtained support for an offer from its main shareholder Vesa Equity Investment.

The entity formed with Vesa to acquire Unieuro is 51% owned by Fnac Darty, as per the deal announcement.

Fnac Darty, which is funding the Unieuro transaction via a mix of equity and debt, would finance smaller acquisitions with deal values below EUR 50m via debt only, the CFO explained.

A good example of a bolt-on acquisition serving the group’s international expansion while keeping its net debt to EBITDA ratio below 2x was the purchase last year of German electronic retailer MediaMarkt’s Portuguese business, which generates around EUR 150m in revenues, he said.

MediaMarkt is a subsidiary of German retailer Ceconomy [ETR:CEC] which holds a 23% stake in Fnac Darty.

Le Tinier declined to speculate about any potential changes to Fnac Darty’s ownership. Last year, French media reported that Vesa’s owner Daniel Kretinsky could want to buy Fnac Darty while Ceconomy reportedly denied merger speculation.

For the Unieuro transaction, Fnac Darty has already carried out prenotification work with the European Commission (EC) and no major competition hurdles leading to any in-depth investigation have been identified, the CFO said, adding that the company expects to file the deal with the EC after the summer.

After the integration of its Italian peer, which posted FY23 revenue of EUR 2.6bn, Fnac Darty would generate around EUR 10bn revenue, according to the deal announcement. However, Unieuro is not operating in France while Fnac Darty has no presence in Italy, the CFO said.

The EC will assess competition in the relevant markets and make sure that there are no dependencies in terms of suppliers, he said, declining to elaborate further.

Fnac Darty has a network of more than 1,000 stores globally. It operates mostly in France and Switzerland but also in countries such as Spain, Portugal, Tunisia and Qatar. It posted FY23 revenue of EUR 7.9bn, including EUR 6.5bn from France and Switzerland combined

The group will now enter Italy through the acquisition of market leader Unieuro provided that the regulatory process is completed and the deal cleared in 4Q24, the CFO noted.