Britain's second-largest department store chain Debenhams plans to return to the stock market on May 4th, offering shares that will value it at nearly £2 billion(€2.88 billion).
The retailer - which has stores in Dublin, Cork, Belfast and Derry - has given a price of 195-250 pence a share, implying a market value of £1.675 - £1.95 billion.
It will issue 314.6 million new shares and sell 134.8 million shares owned by existing shareholders, selling up to 55 per cent of the company's equity.
"That should be taken as a positive," said a spokesman. "All the owners think there is still significant upside and we want to send that message to the market."
The public share offering will raise £1 billion, the largest amount to be raised on the London Stock Exchange by a British company since June 2005, when PartyGaming floated.
In the Debenhams float, £700 million of the proceeds will be used to reduce debt and £300 million will be shared among the owners. The stock will enter the FTSE 250. The group was bought in 2003 for £1.7 billion plus £100 million debt by private equity consortium CVC Capital Partners, Texas Pacific and Merrill Lynch Global Private Equity. They have since received capital repayments of £1.3 billion.
"We are highly confident this will get a strong reception from the investment community," said a spokesman for Citigroup and Merrill Lynch, the joint global co-ordinators of the offer.
The valuation puts Debenhams on a 2006 price earnings ratio of 12.8-14.9, compared with market leader Marks & Spencer on 17 times, the spokesman said.
Debenhams, with 123 stores, reported earnings before interest, tax, depreciation and amortisation of £198.2 million on turnover of £1.22 billion for the 26 weeks to March 4th, including like-for-like sales growth of 0.6 per cent.
More recently, underlying growth has accelerated, with like-for-like sales up 1.7 per cent in the 32 weeks to April 15th.
Market researcher Verdict estimates that Debenhams' market share has risen to 18.6 per cent from 16.4 per cent in 2005.
- (Reuters)
