Electrical retailer DSG International has moved ahead 3.75p to 58.75p after weekend reports that the company had asked Citigroup to look at a possible sale of its Italian and Spanish chains.
Analysts at Kaupthing said: "DSG's historical acquisition of UniEuro in Italy has been particularly value destructive and is viewed as a poison pill for a trade consolidator like [US group] Best Buy. This speculation is likely to be well received."
Not everyone was so convinced however. Panmure Gordon's Philip Dorgan said: "A clean disposal of the two businesses would obviously make sense. Loss elimination
from overseas gives management one less thing to worry about and the prospect of Italy, in particular, getting a lot worse before it gets better, is a real one.
"That said, getting out cleanly will not be easy, and we believe that the shares' strong recent run discounts the benefits of a streamlining of the business."
And Nick Bubb at Pali International repeated his a sell rating on DSG's shares. He said: "It is hard to see how these disposals would add a great deal of value. We have assumed, anyway, that the small losses of around £8m in Spain (PC City) and Electroworld (in Eastern Europe) are eliminated next year via disposal or closure, in line with the outcome of the group's strategic review in May.
"Pulling out of Italy would be a much more significant move and we would be all for it, but if anybody thinks that DSG could get a good price for UniEuro, in line with Kingfisher's recent lucrative disposal of their Italian operation, then they should think again. UniEuro is losing a lot of money and has no significant freehold assets and there is no obvious trade buyer, with main rival Media Markt dead set on simply grinding them down. We have assumed that DSG would have to pay someone up to £300m to take UniEuro off their hands.
"And, no, we still don't think that Best Buy will bid for DSG. We think the shares are well ahead of the game at this level, particularly relative to Kesa, and we are happy to
maintain a sell."
