PARIS — Continuing to divest of noncore businesses, PPR said the Japanese firm Toyota Tsusho Corp. has agreed to acquire 29.8 percent of CFAO, the African distribution company.
PPR already sold 58 percent of CFAO’s capital via a stock market listing in 2009.
Toyota Tsusho (TTC) plans to pay PPR 37.50 euros per share in August for the 29.8 percent stake, and then launch a voluntary tender offer on remaining shares at the same price. PPR has agreed to tender its remaining 12.2 percent stake in CFAO at that time.
In a research note, Citi Research analyst Thomas Chauvet said the transaction is expected to deliver to PPR a total cash in flow of approximately 980 million euros.
PPR said it plans to use the proceeds to reduce its net debt.
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Operating in 34 countries in Africa and French overseas territories, CFAO sells an array of products ranging from pharmaceuticals to computers, cars and beer. Last year, it posted revenues of 3.1 billion euros.
PPR, previously known as Pinault-Printemps-Redoute, acquired CFAO in 1990.
TTC noted it plans to perform due diligence on the nonautomotive business of CFAO in the coming weeks before confirming its intent to file the voluntary tender offer. TTC agreed to pay PPR an indemnity of 50 million euros in the event it does not file the offer by Sept. 15.
A trading house with annual revenues of $6.5 billion, TTC operates an automotive distribution business and is also involved in energy, health-care products, chemicals, machinery and consumer products.
PPR has long stated plans to shed its retail business to focus on its core luxury and sports and lifestyle divisions, whose brands include Gucci, Yves Saint Laurent, Puma and Volcom. It plans to sell books and electronics chain Fnac and its mail-order division Redcats as soon as market conditions permit.
PPR is due to report its first-half results later today.