PPR is set to net €900m ($1.36bn) from the flotation of CFAO, its African distribution business, which would be France’s biggest public offering in two years.

The retail and luxury goods conglomerate yesterdayon Tuesday set a price range of €24.8 to €29-a-share on the 31m shares it plans to sell in the Euronext listing next month, representing an equity value of €769m- €899m. PPR intends to cede control of its oldest business by selling 50.39 per cent of CFAO’s share capital, with an option to offer up to 57.9 per cent, depending on demand.

Taking into account CFAO’s net debt of €359.4m, the new company will have an enterprise value of €1.9bn-€2.2bn.

François-Henri Pinault, PPR’s executive chairman, said last month the spin-off was a step towards reshaping the company – which owns the luxury Gucci Group and mass retail brands such as Conforama furniture stores and FNAC, the entertainment retailer – around “a coherent group of internationally recognised lifestyle brands”.

Net proceeds will go to PPR, which will, initially at least, use the money to reduce debt. “We’ve reached a point where we are no longer part of PPR’s strategic plans,” Richard Bielle, CFAO chief executive, said yesterdayon Tuesday.

CFAO, which sells cars, pharmaceuticals and consumer drinks in 34 countries, of which 31 are in Africa, began marketing itself yesterdayon Tuesday as an opportunity “to capture the growth potential of the African continent”.

The business has grown rapidly in the past decade with an average annual increase in sales of 11.8 per cent between 1999 and 2008.

“CFAO is the best business in the PPR general retail division,” according to Luca Solca, analyst at Bernstein Research. It “enjoys material organic growth tailwinds, dominant competitive positions and opportunities to expand activities and geographies”.

CFAO said the listing would bolster its growth strategy and would “provide access to new sources of financing”.

Mr Bielle said CFAO did not need to use the offering to raise capital because its cash flow was adequate to fund expansion plans, in spite of a dividend pay-out of 40-60 per cent of net profit. The group was looking at new business opportunities but had no short-term plans to make acquisitions, he said.

Sales this year were likely to fall to about €2.5bn from €2.86bn last year because the global economic crisis had impactedhit car sales, which account for 60 per cent of CFAO group sales.

Operating profit was expected to fall to between €210m-€220m from €277m last year.