Kingfisher swoops on French competitor
City Index April 3, 2014 9:38 PM
<p>Home improvement retailer, Kingfisher, looks set to further boost its presence in France, having announced that it’s in exclusive talks to acquire Mr Bricolage. Under […]</p>
Home improvement retailer, Kingfisher, looks set to further boost its presence in France, having announced that it’s in exclusive talks to acquire Mr Bricolage.
Under the terms of the proposed deal, Kingfisher would acquire a 68.1% stake in the French company at an agreed price of €15 per share. Then, it would move to buy out the rest of the shares held by minority shareholders at the same price.
The total deal value, including the target’s debt, would work out to around €275m.
The deal would be a relatively bite-sized one for Kingfisher – operator of the B&Q and Screwfix brands, among others. But it’s set to add more heft to the company’s operations in France, where it already has a solid presence.
Assuming the deal gets regulatory approval, Mr Bricolage would come along with its 81 directly-owned stores and 435 franchised stores in France. That’s in addition to 69 franchised stores in 10 other countries.
At the time of writing, Kingfisher’s shares are up around 3%.
This follows last week’s positive market reaction on the back of the release of the company’s preliminary results, which were in line with growth expectations.
Last week, Kingfisher announced a 3.5% (0.7% on a like-for-like basis) increase in total revenue at around £11bn.
Pre-tax profit came in at £744m, up from £715m the year before, and is in line with expectations of between £738m and £748m.
And the company kept shareholders happy: in addition to increasing dividends by 5%, the company announced plans to hand out an additional £200m to shareholders during the fiscal year 2014/2015, as part of a multi-year capital returns programme.
The company has expansion ambitions as gradual recovery continues.
Certainly, Kingfisher has met with challenges recently but if recent news flow is anything to go by, there looks to be momentum in a gradual recovery.
And the company has intentions of capitalising on it by building more scale. That includes its plans to open two Brico Depot stores in Portugal; as well as four Screwfix outlets in Germany.
Kingfisher certainly has enough financial flexibility to do that, and expectations here are that further bolt-on acquisitions are also likely.
Of course, the renewed momentum looks reflected in the company’s valuation (shares up some 20% since lows in February), nonetheless, Kingfisher seems to be positioning well for the long term.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.