Dec 3, 2013
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Kering mail order unit attracts management offer

Dec 3, 2013

PARIS, France - Managers at Kering's loss-making La Redoute mail order unit have made an offer to take over the business from the luxury and sports brand group, a source close to the matter said on Tuesday.

Source: La Redoute

The bid from Nathalie Balla and Eric Courteille, the heads of La Redoute and parent division Redcats, follows media reports of similar interest from OpCapita and real estate group Altarea Cogedim.

"The offer was submitted at the end of last week," the source close to Balla said, confirming a report in Challenges magazine, without giving financial details. Kering has said it expects to make an announcement on a sale before Christmas.

La Redoute is part of Kering's mail order business Redcats, the bulk of which it has already sold off as it seeks to transform itself from a retail group to a company focused on luxury and sports brands.

Kering has said significant job cuts would be needed as part of a restructuring of La Redoute, sparking protests from staff and local politicians in northern France, as well as demands from Lille's Socialist mayor, Martine Aubry, for guarantees over its future.

Unions fear around 700 jobs are at risk. La Redoute has around 2,500 staff in France, where the government is battling unemployment at a near record 10.9 percent. It employed around 5,000 people in 2008, and has been hurt by ageing logistical and IT tools, as well as the growth of online shopping.

Kering has injected more than 400 million euros ($542 million) into La Redoute since 2008 and would be ready to inject at least another 300 million in order to cover its losses for a few years more and finance its restructuring, sources close to the matter have said.

Kering Chief Executive François-Henri Pinault told Aubry he was ready to give investment support to any buyer and that he would guarantee operations during La Redoute's modernisation, the politician said last month.

She had criticised Kering for not doing enough to bring La Redoute's logistics and IT systems, and staff training, up to date sooner.

A spokesman for Kering confirmed it was still aiming to announce a deal by Christmas but declined to comment on possible bidders. Kering has said it would favour a buyer who could keep the business going.

Kering began its transformation in 2006 with the sale of retail chain Printemps when the group was still called PPR, an abbreviation of Pinault Printemps La Redoute. Kering is controlled by the Pinault family.

Kering issued a profit warning last month, blaming one-off charges related to sports brand Puma's restructuring and the disposal of La Redoute.

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