Qatari Printemps Purchase Agreed, but Corruption Rumors Abound

Les Grands Magasins Printemps in Paris. Photo: marsupilami92 for flickr.

Les Grands Magasins Printemps in Paris. Photo: marsupilami92 for flickr.

A matter of days ago, Qatar was celebrating over the acquisition of yet another esteemed European brand, as French market regulators cleared Qatari investors to buy storied retail chain Printemps in a byzantine multi-billion dollar deal. But, with news of a corruption investigation emerging almost immediately, those celebrations may have been premature.

The transaction’s titanic financial and cultural significance are matched by its murkiness. While it is known that Divine Investments (Disa), a Luxembourg-based fund, had bought the chain with Qatari backing, the parties behind Disa’s purchase are “unidentified,” according to Bloomberg.

The exact size of the transaction is also unclear, but news sources are valuing it between 1.6 billion and 1.8 billion euros, including between 550 million and 600 million euros worth of debt.

Printemps’ former majority owner, the Deutsche Bank AG real estate fund RREEF, had been in talks with Qatari investors since at least February of this year, and had been seeking a buyer for its 70% share in the chain “for months” prior to negotiations with the Gulf state, according to Reuters.

According to the Wall Street Journal, the transaction, which was formally announced in April, saw the Italian Borletti Group—which had owned the other 30% of Printemps since 2006—buy up RREEF’s share. The Borletti Group itself was then acquired by Qatari investors using Disa as a proxy.

The Qatari investors chose Borletti’s offer over a competing bid from rival French luxury retailer Galeries Lafayette, which had offered to buy Printemps’ operations while Qatar acquired its real estate holdings.

China’s Dalian Wanda Group Corp. had also tried to acquire Printemps last year, according to Senior Vice President Hu Zhanghong. Had Dalian’s efforts succeeded, Printemps would have joined Club Med and a number of prestigious Bordeaux wineries on the list of iconic French businesses under Chinese ownership.

It now seems that the shadowy nature of the exchange has caught the attention of the Paris prosecutor’s office, which confirmed on Friday that it was investigating claims of corruption connected to the sale.

The investigation, which was formally opened on June 28, is looking into charges made by union representatives of breach of trust, money laundering, private corruption, and tax fraud.

For months, union officials have been pressing French prosecutors to examine the deal more closely. In May, spokesman Bernard Demarcq claimed to have discovered “multiple financial arrangements … specifying exorbitant commissions and intermediaries which also get exorbitant sums.”

In April, when the deal had just been publicly announced, Demarcq expressed concerns that “we have no information regarding the true identity of the buyers.”

Libération reported that the unions have threatened to go to both civil and criminal courts to contest the Qatari acquisition.

Demarcq also expressed concern that the new owners might downsize the company. RFI reported that the unions expect the Qatari management to lay off 226 employees out of a total of 3,400.

Printemps CEO Paolo de Cesare attempted to deflect union concerns of layoffs, saying that the buyers had a five-year expansion plan for the company that would create 500 new jobs. According to Vogue, the new owners hope to open three new franchises in the years ahead.

Speaking to WWD, a Disa spokesperson called Printemps a “symbol of French fashion and luxury,” and said that the new management planned to expand the chain both in France and around the world.

According to holding company head CEO Maurizio Borletti, the Qataris “wanted 100% ownership of Printemps, with no minority participation.”

Printemps owns 16 department stores across France, including the celebrated Grand Magasins Printemps on Boulevard Haussman in Paris. It also has branches in Japan, the Persian Gulf, and Southeast Asia.

Qatar built its current wealth almost entirely on oil, but, due to factors including increased competition from US shale gas and renewables, has recently begun diversifying its economy with strategic foreign investments and acquisitions.

France has been of particular importance to Qatar’s overseas business expansion. Around 10% of Qatari foreign holdings are based in France, including the Paris Saint Germain football club, the Virgin-Monoprix building, and four luxury hotels in Paris, Cannes, and Nice.

Qatar can also boast London department store Harrod’s and Italian fashion house Valentino as luxury brands now under Qatari management. Qatari interests also own an 8.7% stake in Tiffany’s, and smaller holdings in LVMH and Porsche.

The tiny Persian Gulf emirate will also host the 2022 World Cup, having beaten out the United States in a heated contest for the bid.

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  1. […] over the acquisition of yet another esteemed European brand, as French market regulators cleared Qatari investors to buy storied retail chain Printemps in a byzantine multi-billion dollar deal. But, with news of a corruption investigation emerging almost immediately, those celebrations may […]

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