John Clare, chief executive of DSG International, is to increase due diligence on a possible acquisition in Russia after uncovering a £10m fraud at a recently acquired business in France, reports the FT.
The electronics group, which owns Currys in the UK, on Thursday announced that warehouse workers in Paris had defrauded the company in an elaborate scam that wiped out the £8m-£10m profits that had been expected this year at Fotovista, the internet retailer acquired last year for £185m.
The complicated Russian deal would see DSG acquire an initial 10 per cent of Eldorado, an electronics retailer in Russia, before progressively increasing its holding. Mr Clare said he would decide in the next two months whether to proceed with the acquisition, which is thought to hold good growth prospects but significant risks.
The French fraud is another setback in DSG’s aggressive plans for international expansion. Some analysts feel the mishap makes DSG more vulnerable to a private equity bid, noted FT Alphaville’s resident experts in their Markets Live discussion on Thursday.