Skip to main content

Kingfisher in $4.6bn French deal

LONDON, England (CNN) -- British retailer Kingfisher plans to take full control of French do-it-yourself chain Castorama for 3.2 billion (5.2 billion euros, $4.6 billion).

Kingfisher (KGF), which owns the Comet and Darty electrical shops, will offer 67 euros per share for the 45 percent of Castorama (PCY) it does not already own.

The offer, revealed on Wednesday, represents a 20 percent premium over Castorama's stock price before speculation arose about the acquisition, which Kingfisher plans to fund by raising 2 billion in a sale of shares to exiting investors.

The retailer has also announced plans to separate its DIY business, which includes B&Q in Britain, from its electrical arm.

Chief Executive Geoff Mulcahy, who also announced he is leaving the company, said: "I have overseen Kingfisher developing strategically through a series of transforming moves over nearly 20 years.

"Bringing all of our home improvement businesses under one management roof, and separating our home improvement and electrical businesses as two companies, will mark a culmination of this process.''

Kingfisher initiated a strategic review on March 20 to revive its flagging share price as investors became disenchanted by Mulcahy's inability to drive through the merger of B&Q and Castorama to form Europe's biggest DIY group in 1998.

Its 1998 Castorama deal only gave Kingfisher a 50 percent voting right, which meant it could not push through its strategic vision.

Castorama's stock rose 4.3 percent to 67.25 euros in mid-morning Paris trading. But Kingfisher's stock fell 1.4 percent to 380.68 pence in early London trading on Wednesday on concerns it does not have the support of Castorama.

Chairman Francis Mackay said he expects cooperation from Castorama but could not guarantee it. The company said it plans to "re-invigorating and modernising" Castorama to bring it into line with B&Q.

The acquisition is expected to modestly improve earnings per share after the transaction is completed, MacKay said.

The consumer electronics business is expected to float on the stock exchange with a value of about 2.5 billion to 3 billion pounds, Mulcahy told reporters.


Back to the top