Europe’s biggest DIY retailer Kingfisher — which already owns French home improvement chains Castorama and Brico Depot — is just days away from sealing its third cross-Channel buy-out after it confirmed it is in exclusive talks to acquire Mr Bricolage.
The £227m deal by the owner of B&Q would allow the British company to leapfrog France’s largest home improvement chain, the Groupe Adeo-owned Leroy Merlin, to become the country’s biggest DIY retailer. Kingfisher says it intends to leave Mr Bricolage’s franchisee network intact and offer members improved terms.
As part of the negotiations, Kingfisher entered into a non-binding memorandum of understanding with Mr Bricolage’s principal shareholders on April 3. The next step is for executives of the two companies to meet in France before signing a binding agreement.
Kingfisher intends to acquire 68.1 per cent of Mr Bricolage share capital from its majority shareholders at around €15 (£12.45); 41.9 per cent from the Association Nationale des Promoteurs de Faites Le Vous-Mene (ANPF), a group of franchisees, and 26.2 per cent from the founding Tabur family. It would then be legally obliged to offer the same price to minority investors wishing to dispose of their holdings.
The British company concedes the purchase will be conditional upon EU anti-trust clearance and the whole process is likely to take until the end of its financial year, which runs until the beginning of February, 2015.
Kingfisher chief executive, Sir Ian Cheshire, said the take-over represented an “attractive growth opportunity”. The City has already indicated its approval, as have most analysts who describe the company’s French expansion as “compelling”.
And the move is also seen as a chance for Kingfisher to add Mr Bricolage’s high street presence to the predominantly “out of town” portfolio of the other two businesses. “The retention of Mr Bricolage’s excellent management team, the addition of an established and successful international franchising operation and exposure to new territories makes this an attractive growth opportunity,” added Cheshire.
Mr Bricolage’s chief executive, Jean-Francois Boucher, said that based on 2012 figures his company has an 11.3 per cent share of the French home improvement market, making it a pre-tax profit last year of €17.2m (£14.2m). Taking control of all the retailer’s stores, across 10 countries, would provide Kingfisher with a useful entry point into new markets, including Belgium and Bulgaria.
The tie-up would also present Kingfisher — which trades from 1,124 stores in nine European and Asian countries and makes about 50 per cent of its annual profit in France — with multichannel opportunities, such as the development of a click-and-collect service. Kingfisher does not currently offer such a service in France. Mr Bricolage’s urban locations would be ideal for the launch of a click-and-collect operation.
News of the negotiations comes just 10 days after Kingfisher said it would return £200m to shareholders this year and seek a partner for its Chinese operation. “We are actively managing our business and we are very interested in opportunities over the next three to five years,” added Sir Ian Cheshire.
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