B&Q owner's warning sparks takeover interest

Private equity groups are lining up takeover bids for the owner of DIY chain B&Q, it emerged today.

Permira and Apax Partners are examining a potential £7bn (€10.3bn) offer for Kingfisher, a report claimed.

Other investment companies including Kohlberg Kravis Roberts and US DIY giant, The Home Depot, are also looking closely at the group, the Financial Sunday Express said.

A shock profits warning from Kingfisher last week was behind the interest, the report said.

The group, which also owns catalogue DIY retailer Screwfix in the UK and French DIY chains Castorama and Brico-Depot, warned on Wednesday that first quarter profits were likely to be 15% lower than in 2004.

Kingfisher, Europe’s biggest home improvement retailer, blamed the drop on poor weather and weak consumer confidence in its core UK market.

No-one from Permira or Apax Partners was available to comment.

A spokesman for Kingfisher declined to say whether the company had received approaches from Permira or other potential bidders.

“We’re a highly successful business with market-leading operations in nine countries across Europe and Asia,” he said.

“It would not surprise me at all if people were to take a look at us from time to time, but as far as specific approaches go, we have nothing to say.”

Permira and Apax were “certainly having a look” at Kingfisher, the Financial Sunday Express cited a source close to Permira as saying.

Permira was the firm behind the turnaround of DIY chain Homebase, which turned an investment of £140m (€206.8m) into £850m (€1.3m) within 20 months.

Despite its reported interest in Kingfisher, analysts say the climate for takeovers of retail chains is unfavourable in the face of falling consumer spending.

Apax walked away from a potential deal for Woolworths last month, citing an inability to confirm certain key cash items in the high street retailer’s books.

It did not rule out a deal in the future, however, saying it reserved the right “to make or participate in an offer within the next six months.”

The Financial Sunday Express cited Kingfisher chief executive Gerry Murphy as being unable to comment on the speculation, but insisting the retailer remained on track to weather the storm.

Kingfisher has 60,000 staff at 600 stores worldwide, with about 29,000 working at its 337 outlets in the UK.

B&Q last month announced plans to open an outlet in Naas, Co Kildare. The company said 100 jobs would be created at the store, which will be its seventh in Ireland.