French waterworks conglom Generale des Eaux has agreed in principle to pay $ 400 million for 80% control of FNAC, France’s largest video and music retailer.
Terms, agreed to late Monday evening by negotiators representing GMF, an insurance firm controlling FNAC, and Generale des Eaux, reportedly headed off a bid by Germany’s Bertelsmann group to gain control of the chain.
FNAC generated $ 1.6 billion in sales during 1991-92.
Offer, made by Generale des Eaux’s Phenix division in concert with Groupe Altus, reportedly involves a $ 200 million cash offer and an equal amount in stock offerings.
When announced publicly, terms are expected to include an additional $ 100 million Phenix investment in ongoing GMF real estate projects.
France’s largest waterworks company, Generale des Eaux has increasingly diversified its real estate and media investments. Currently, the firm has positions in Canal Plus, the Babelsberg Studios in Germany and Euro theme parks.
With major outlets in key French cities including Paris, Lyons and Bordeaux, FNAC developed a “multiculture” shopping concept.
Founded in 1971, FNAC has consistently expanded its video and music sales while incorporating libraries, concert bookings and photography supply areas within its activities.
Since January, when rumors of negotiations first surfaced, closely traded FNAC share prices have risen 59.5%.
The Paris stock market responded to sale rumors by sending prices up an additional 6.2% during Monday’s session.
General des Eaux, explained one market analyst, “sees itself moving into almost anything concerning leisure activities and, frankly, their current cable investments are flat.”
Projecting a strong five-year growth for FNAC, he added, “Its purchase gives Generale des Eaux a position it hasn’t had in direct distribution and fits well within its continuing multimedia diversification.”