Darty board likely to recommend Fnac bid in coming days

By Dominique Vidalon and Pascale Denis PARIS (Reuters) - Darty Plc expects to recommend French retailer Fnac's takeover offer in the coming days and to report a "very significant" rise in full year profit next month, its chief executive said on Thursday. Regis Schultz said Darty's board was likely to recommend Fnac's offer for Europe's third-largest electrical goods retailer, where he said sales had accelerated sharply in the fourth quarter in its core French market. "It seems obvious that an offer that is higher in value would be recommended, provided there is a certainty it can be executed," Schultz told Reuters in a telephone interview, with reference to Fnac outbidding a rival offer from Steinhoff. Fnac, which is looking to reduce its reliance on highly-competitive books and CD markets, made a final offer for Darty of 170 pence a share in April, valuing it at about 900 million pounds. Darty shares were flat at 168 pence at 0842 GMT. Rival bidder South African furniture retailer Steinhoff has said it would not raise its previous 160 pence a share offer, effectively withdrawing from a bidding war which has driven a doubling in Darty's share price since Fnac made its approach public in September. Steinhoff's unit Conforama, however, said on May 24 that its offer for Darty would remain open until June 10 "provided that the board of Darty has not withdrawn its unanimous and unconditional recommendation". Darty, which earlier reported a 12 percent rise in like-for-like fourth-quarter revenue, a sharp acceleration from a 2.7 percent rise in the third quarter, is due to post its full-year earnings on June 16. "We are ending a very good year with a climax," Schultz said, adding that Darty had cut net debt by 115 million euros to 108.8 million euros thanks to cost discipline. Sales at Darty France, which represents 70 percent of group revenue, jumped 16 percent in the quarter, also a sharp improvement from a 4.4 percent rise in the previous quarter. A switchover of the French digital terrestrial network to HD in April lifted sales as many customers were forced to either buy a new set top box or a new television, Darty said. Like larger rivals Metro's Media-Saturn and Dixons , London-listed Darty has been battling weak consumer spending and competition from online retailers. Darty, with some 400 stores in Europe, has responded by exiting loss-making operations in Italy, Spain, Turkey and the Czech Republic, and refocusing on France, Belgium and the Netherlands. (Reporting by Dominique Vidalon; Editing by Andrew Callus and Alexander Smith)