By Dominique Vidalon
PARIS (Reuters) - Carrefour (PA:CARR) has moved a step closer to floating its property unit Carmila this year with the planned merger of Carmila with Cardety (PA:CARD), a listed property firm owned by the French retailer.
The new company would be the third-largest listed European retail property group with a 5.3 billion euros ($5.6 billion) portfolio including 205 shopping centres in France, Spain and Italy, and a net asset value of 2.9 billion euros (2.50 billion pounds).
Carrefour, the world's second-largest retailer, has said it is targeting an initial public offering for Carmila this year.
Carrefour shares edged up 0.2 percent to 22.86 euros in early session trading, outperforming a 0.3 percent decline in the broader, European retail index (SXRP).
Analysts say floating Carmila would allow Carrefour to get extra cash to fund its expansion and also unlock some hidden value within Carrefour's asset portfolio.
They see the IPO as a potential catalyst to Carrefour's shares, which have been stuck in a 20-26 euros range for much of the last year due to a disappointing performance in its core French market. Carrefour reports its 2016 results next week.
Carrefour will have a 42 percent stake in the new group while other shareholders of Carmila and Cardety will own 55.3 percent and 2.3 percent respectively. It will be listed on Euronext Paris and named as Carmila.
"The net asset value of the new merged entity is 2.9 billion euros, valuing Carrefour's stake at 1.230 billion euros. Most analysts including us value Carmila book value of 952 million in a Carrefour Sum Of The Part (SOTP). This implies a valuation uplift of 0.38 euros/share," Bernstein analysts said in a note.
After the merger, the new company would seek to raise 500 to 600 million euros of new capital through a placement of new shares on the market during 2017.