Bloomberg reported that Toyota Tsusho Corporation, the trading arm of Japan's largest carmaker, offered EUR 1.62 billion to buy the remaining 70% of auto and drugs distributor CFAO SA to expand its business in Africa.

As per report, Toyota Tsusho plans to buy shares for EUR 37.5 apiece through a public offer. The price, which is 1.6% higher than CFAO's latest close, matches the bid it made to buy a stake held by France's PPR SA last month. The companies said at the time Toyota Tsusho was considering a general offer.

The deal, Toyota Tsusho's biggest acquisition since its purchase of Tomen Corporation in 2005, would pave the way for the Japanese company to reduce its reliance on autos and expand its business in Africa. The sale gives Paris based PPR, owner of the Gucci luxury brand, an exit from assets that don't fit its strategy to focus on sporting and luxury goods.

Mr Virginie Blin, an analyst at AlphaValue with an add recommendation on CFAO, said that "This is a good price, but not a very generous one. They'd have to offer a little more. The risk is that everyone might not accept the deal at this price."

CFAO distributes goods ranging from trucks to pharmaceuticals in 34 countries, mainly in Africa and French Overseas Territories. The company generated revenue of EUR 3.1 billion in 2011.

Mr Jiro Iokibe, a Tokyo based analyst at Daiwa Securities Group Inc, said that "The company will now have access to the whole African continent. The acquisition will also help Toyota Tsusho expand its business away from autos."

Toyota Tsusho, which generated 64% of its profit in the last fiscal year from auto related businesses, has forecast it will reduce the proportion to 50% by March 2017.

PPR, which on August 2nd 2012 completed its EUR 688 million sale of a 30% stake in CFAO to Toyota Tsusho, agreed to unload its remaining 12% holding to the Japanese company. Toyota Tsusho said earlier this month it registered to sell as much as JPY 200 billion in bonds.

Source - Bloomberg

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