Pinault Printemps Redoute is heading out of Africa. The French conglomerate’s decision to spin off a majority stake in CFAO, its African car and drugs distribution arm, is welcome. The proposed Euronext public offering of shares in CFAO by year-end depends on market conditions, but PPR should not be too precious. Shedding light on the most opaque and little understood business can hardly fail to crystallise value. There are no comparable companies, making valuation of a business that last year achieved an operating margin of about 9 per cent on €2.7bn sales a little tricky.

Its main business – selling cars in a number of African countries and French overseas territories on an exclusive basis for European, US and Asian carmakers – has been ticking along with more than 10 per cent annual top-line growth for several years. Its other activity, Eurapharma, which distributes drugs in much the same markets and accounts for a quarter of CFAO’s revenues, has been growing at about 3 per cent, on average, during the past three years. Putting its forecast €250m of operating profit in 2010 on a multiple of 8, a 20 per cent discount to PPR as a whole, suggests an enterprise value of about €2bn.