Under the deal's complex structure Kingfisher is paying an initial pounds 50m for 60 per cent of Wegert, based in Berlin. The sum also includes a deal to buy Promarkt Holdings, another electrical business with a stronghold in southern Germany and Luxembourg. Kingfisher has options to buy the remainder of Wegert for pounds 20m to pounds 202m depending on performance.
"Strategically, the deals make sense but there are some concerns about the eventual price," one analyst said. "If it ends up at pounds 250m that would look far too expensive."
The two acquisitions will give Kingfisher almost 2 per cent of Germany's fragmented electrical retail market. Metro, Germany's largest retail group, has the largest share with 10 per cent.
Analysts said the deal could herald a move by Kingfisher into the German DIY market. There has been consistent speculation about a possible move for Hornbach, a German DIY retailer which has held talks with Kingfisher before.
Kingfisher has been building a European business for several years. It already owns Darty, the French electrical retail chain, as well as businesses in Holland and Belgium.
Wegert last year made profits of pounds 6.3m on sales of pounds 237m. Promarkt made pounds 222,000 on sales of pounds 164m.
Kingfisher shares closed 16p lower at 1,046p.Reuse content