French retail giant Carrefour has remained silent on reports that its board will be examining the possibility of spinning of its property and discount businesses later today (1 March).
According to a Reuters report, citing an unnamed source, the board will today consider proposals to spin off 25% of its Carrefour Property and 100% of its Dia businesses. Carrefour confirmed that it was mulling plans to list Carrefour Property and Dia at the end of January. However, a spokesperson for company declined to comment further on the progress of the group’s “internal decision making process”.
Speculation surrounding the future of Carrefour’s hard-discount and property divisions has mounted in recent months, with reports suggesting that activist shareholders Groupe Arnault, the private investment vehicle of Bernard Arnault, and US private-equity firm Colony Capital have been pressuring the retailer to sell assets in order to boost its share price.
However, RBS analyst Justin Scarborough warned that although the outcome of this review will have a significant impact on the company’s short-term share price, it will not necessarily lead to long-term value.
“The outcome of this review, in our view, will be critical in terms of the near term share price movement although we do not believe that financial engineering should necessarily be a magical value creator,” Scarborough wrote in a note to investors.
An announcement on the spin is expected when Carrefour delivers its results for fiscal 2010 on Thursday.
“It would be interesting to see at its FY10 results what Carrefour says about these strategic options and how it plans to maximise value creation,” Scarborough concluded.