* Agrees 15 euros a share offer with Mr Bricolage's biggest
* Proposes subsequent mandatory offer to buy out minority
* Enterprise value of deal is 275 million euros
* Kingfisher shares up 2.6 pct, Mr Bricolage shares
(Adds detail, Kingfisher, Mr Bricolage CEO, analyst comments,
By James Davey and Dominique Vidalon
LONDON, April 3 Kingfisher, Europe's No.
1 home improvement retailer, moved to strengthen its position in
France, its most profitable market, with a 275 million euros
($379 million) takeover bid for smaller rival Mr Bricolage
The owner of B&Q, the market leader in Britain, already
trades as Castorama and Brico Depot in France where it is
jostling for the top spot with Group Adeo, which owns the Leroy
Mr Bricolage's Chief Executive Jean-Francois Boucher told
reporters on Thursday that based on 2012 data his firm had an
11.3 percent market share, Kingfisher around 34 percent and
Group Adeo about 35 percent.
Kingfisher, whose own estimate of its market share is much
lower, said it had entered exclusive negotiations with Mr
Bricolage's two main investors to buy their shareholdings for 15
euros a share.
A deal would allow the UK firm to take out a rival, add
buying scale and provide a platform for an international
franchise model. Mr Bricolage owns 81 stores and has 435
franchised stores, including some overseas.
Any deal is also likely to raise competition concerns but
both Kingfisher and Mr Bricolage expect French authorities to
follow a recent pattern of looking at concentration issues on a
local market basis rather than looking at the national market.
Castorama and Brico Depot stores tend to be large and out of
town while Mr Bricolage outlets tend to be smaller and in urban
areas, a Kingfisher spokesman noted.
"This would add a third, complementary strong business
alongside Kingfisher's existing two successful brands in
France," said Chief Executive Ian Cheshire.
The firm would also argue that only Mr Bricolage's directly
owned stores should be considered in market share calculations.
Nevertheless, Kingfisher expects the acquisition process to
take until the end of its 2014-2015 financial year.
Jean-Claude Bourrelier, chairman of Bricorama, which has a
3.5 percent share of the French DIY market, described the deal
as "bad news" and said it would hurt competition.
Kingfisher, which trades from 1,124 stores in nine countries
in Europe and Asia, makes about 50 percent of its annual profit
in France. Its shares rose 2.6 percent to 443 pence at 1124 GMT,
valuing the business at 10.5 billion pounds.
Trading in Mr Bricolage was halted on the Paris bourse and
will resume on Friday. Its market value is 136 million euros.
Analysts said there was clear strategic merit in buying the
firm, which made a pretax profit of 17.2 million euros in 2013,
on revenue of 552.1 million euros.
Mr Bricolage's 69 franchised stores in 10 other countries
would also provide Kingfisher with a useful entry point into new
markets, including Belgium and Bulgaria.
Analysts at Deutsche Bank reckon the deal should enhance
Kingfisher's earnings by about 2 percent in its 2015-16 year.
"This is good news, coming on the back of a couple of months
of improving do-it-yourself data in what remains a challenging
French market," they said.
Kingfisher, which last week posted a 4 percent rise in
annual profit, proposed to acquire 41.9 percent of Mr
Bricolage's equity from the Association Nationale des Promoteurs
de Faites Le Vous-Mene (ANPF), a group of franchisees, and 26.2
percent from the Tabur family.
It would then make a mandatory offer to buy shares held by
minority shareholders at the same 15 euros a share price.
At this level, including net debt of 120 million euros, the
enterprise value of the deal would be 275 million euros.
The plan, which is currently a non-binding agreement,
includes keeping Mr Bricolage's existing franchisee and
The two companies will meet with their respective works
councils in France and improved commercial terms will be
proposed to the franchisees. Depending on the outcome, a binding
agreement would be entered into.
($1= 0.7263 Euros)
(Editing by Elaine Hardcastle)