Kingfisher share price: Takeover bid hits brick wall

Kingfisher Plc’s (LON:KGF) shares took a sharp fall this morning following the announcement that the company’s takeover bid of rival French chain, Mr Bricolage had suffered a setback.

Kingfisher, which trades as B&Q in the UK, released a company statement noting that the majority of the Board of Mr Bricolage and the ANPF – a major shareholder of Mr Bricolage – have had reservations in relation to the transaction. The company is still awaiting clarification on the standing of the deal.
Shares in Kingfisher quickly stumbled to 364p by 08:09 GMT this morning, minutes after the company statement was released.
As Europe’s biggest home improvement retailer, Kingfisher entered talks with Mr Bricolage last April, presenting a €275m (£227m) debt-inclusive takeover bid. The company sought 26.2 percent of the share capital from the Tabur family – another major shareholder – and 41.9 percent from ANPF. The Tabur family have confirmed that they are still committed to the transaction.
Mr Bricolage owns 81 stores and 435 franchised stores and currently has a market value of €136 million. Shares in the company have been suspended on the French stock exchange since yesterday.
The proposed takeover deal was designed to give Kingfisher a firmer stronghold in France, the company’s most profitable market, where it trades under the name Castorama. About half of its annual profit is made within the country.
“The implications for the transaction are currently uncertain. Kingfisher will update investors in due course,” said the company statement. Even if both companies were to come to an agreement, the acquisition would need to be cleared by French competition authorities, a process that could continue right through the year. A statement from Mr Bricolage is still pending.
This setback comes following the news in January that two of Kingfisher’s top executives had quit the company. Former chief executive, Sir Ian Cheshire and former senior executive in France, Philippe Tible left the company after the group decided to revamp its senior leadership team. Both are now set to receive a total payoff of £5 million between them.
As of 10:39 GMT, Tuesday, 24 March, Kingfisher plc share price is 368.60p.