Dixons pays £58m to have Pixmania taken off its hands

 

Dixons today shed its loss-making French
online business, handing the buyer tens of millions of euros to take it off its
hands.

Pixmania is being bought by German industrial conglomerate Mutares and Dixons, which runs Currys and PC World, will pump 69 million (£58 million) into the business to fund it going forward.

The news was greeted with enthusiasm and relief on the stock market with Dixons Retail shares jumping more than 8%, 3.7p at 48p.

The shares have risen by more than 150% in the past year.

At the same time Dixons is also selling its loss-making Turkish chain of 32 ElectroWorld shops to local retailer Bimeks for £2 million.

The deals mark the latest move by chief executive Sebastian James, who took the helm just over 18 months ago. He said: “I am a passionate believer that Dixons succeeds where we offer our customers a fully integrated multi-channel proposition and where we are the market leader. We were not that in France and have been looking at a way of getting a result for some time.”

Dixons also reported 4% growth across its ongoing businesses in the first quarter to end-July.

This included a 6% rise in the UK, 5% in northern Europe and a 12% fall in southern Europe, where sales of air conditioning, in particular, were hit by a cooler than normal summer.

James, who has also overseen the sales of a Norwegian business and Equanet as well as closing the Dixons.co.uk website, said: “We have had an encouraging start to the year given that we had a particularly strong start to the previous year. Margins have held up reasonably well.”

Dixons paid £185 million for Pixmania in 2006 and bought out the remaining minority for just £8 million last year. The business lost £31 million on sales of £357 million last year and in the latest quarter its sales fell by a further 28%.

James said: “Pixmania needs a different kind of entrepreneurial flair, which is why we have agreed to inject cash into it and to back its management under their new owners.”

He said he remained cautious about the state of the electrical retail market and added: “But with this good start, I am excited about the rest of the year and about the future for a successful and simplified group.”

The Pixmania deal is conditional on it successfully concluding negotiations with its workforce in France over the transfer of jobs. Dixons wrote down the value of the business by £135 million this year.

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