Tesco stays hand on French bid

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The Independent Online
Tesco had yet to declare its hand in the pounds 2.5bn bid for Docks de France supermarkets group last night even though the French company's shares were suspended on the Paris bourse yesterday pending an announcement.

Docks de France is on the receiving end of an offer from the rival hypermarket group Auchan and other bidders have only until today to declare their hand. With Tesco silent yesterday it is now believed that the UK supermarket group has decided not to accept the French group's plea for a white knight intervention.

Instead, Docks de France is set to accept a slightly higher offer from Auchan. The offer, which has not yet been disclosed, is thought to be in the region of 5-10 per cent higher than the previous bid, valuing Docks de France at up to pounds 2.75bn. It is understood Tesco felt the deal, which would have involved a huge and dilutive rights issue, would have been too high a price to pay. At that valuation, Tesco could not see how the deal would enhance shareholder value.

Though Tesco is keen to expand in Europe and did hold talks with Docks de France it will now press ahead with the expansion of its Catteau business in France which it acquired in 1992.

Tesco's decision is likely to be greeted with relief in the City. Tesco's shares have fallen by almost 9 per cent since rumours of its interest in Docks de France began to circulate. They closed 7p lower at 27p yesterday.

One analyst said that Tesco's decision to walk away from the French deal would make the shares a strong buy. Bill Myers of Williams de Broe said it would leave Tesco free to concentrate on the home market, where it is continuing to win share from Sainsbury's.