DSG expands online with €266m French buy

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The Independent Online

Just days after DSG announced it was axing its Dixons high street chain to move the brand online, the group has taken a further leap into cyberspace with the €266m (£185m) acquisition of a French internet-based camera retailer.

DSG is buying the group behind Pixmania, which sells consumer electronics across Europe, and handing a fortune to the French family who set it up 36 years ago in the process.

The deal takes DSG into 12 new countries across Europe, including Poland, Germany and The Netherlands.

John Clare, DSG's chief executive, said the purchase of a 75 per cent stake in Fotovista, the parent company of Pixmania, represented "a significant step" in his goal of becoming Europe's leading electrical e-tailer.

Analysts seized on the price paid for the controlling stake, criticising it for being too expensive and diluting the group's earnings. Fotovista, which was set up in 1970 by two brothers - Pierre and Jean-Claude Rosenblum - made an underlying profit before tax and interest of €7.6m in the year to the end of March on sales of €450m.

DSG will pay €155m of the purchase price to acquire the entire stake held by LMBO, a French venture-capital group that controls Fotovista, and a further €36m for the shares held by the Rosenblum family and a handful of managers. The balance will cover a subscription for new equity.

DSG also has an option to buy out the remaining 25 per cent over the next three to five years, although if Pixmania hits its financial targets the founders also have the right to increase their holding in the business.

The existing management, which includes the two sons of Jean-Claude, Steve and Jean-Emile, are staying on.

Shares in DSG closed down 4.25p yesterday at 182p.