Kingfisher backed over DIY bid

LONDON, England (CNN) -- Kingfisher's planned £3.2 billion ($4.6 billion) bid for the rest of Europe's biggest Do-It-Yourself chain Castorama is "fair," a bank has ruled.

Monday's ruling by investment bank Rothschild -- appointed by Britain's Kingfisher and France's Castorama because the 67-euros-a-share deal was considered too low by a group of Castorama shareholders -- gives Kingfisher control of the world's third-largest DIY retailer.

MORE STORIES • Kingfisher in $4.6bn French deal

Kingfisher (KGF), which owns the Comet and Darty electrical shops, made its offer to buy the 45 percent of Castorama (PCY) it does not already own two months ago. The retailer's share price has been driven lower because of inability to drive through the merger of B&Q and Castorama in 1998.

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

Analysts said Kingfisher's offer looked attractive as markets around the globe stumbled. Castorama's stock price rose 3.1 percent to 66.10 euros on Monday morning.

"This is good news from kingfisher's point of view. It get the uncertainty out of the way," Iain McDonald, a retail analyst for Numis Securities, told Reuters.

The retailer launched a £2 billion share sale to exiting investors on Monday to pay for the deal. Kingfisher said shares would be sold at 155 pence each, a 50 percent discount on Friday's closing price.

Kingfisher's stock rose 3.2 percent to 320 pence in early London trading but is a long way from its 1999 peak of 968 pence.

It now plans to separate its DIY business, which includes B&Q in Britain, from its electrical arm. It also clears the way for Chief Executive Geoff Mulcahy to leave the company after 20 years at the top. He will stay while a successor is found.