Kingfisher has opened discussions with the Venturini family, which controls 30 per cent of But shares. It is likely that Kingfisher would then be required to make an offer to the remaining shareholders.
Kingfisher said yesterday that the conditions under which a mandatory offer could be made to the remanding shareholders would be investigated if the Venturini deal went ahead.
Under the terms of yesterday's announcement, a deal with the Venturini family would be struck at a price "not exceeding 300 francs per share. That would value the stake at pounds 92m, while the remainder would be worth pounds 225m. Kingfisher has so far spent pounds 85m acquiring its existing stake in two tranches - 20 per cent in February last year and a further 6 per cent in June.
Kingfisher said it felt But would complement Darty, its existing French electrical business. But is the second largest furniture chain in France and the fourth largest electrical retailer. It has 235 stores, of which 50 are wholly owned with the remainder operated under a franchise agreement.
Analysts said the deal was opportunistic given the current strength of sterling against the French franc. Kingfisher shares fell 15p to 701.5p though this was attributed to a downbeat trading statement on Do It All issued at the Boots annual meeting yesterday.
Ray Maconochie of Henderson Crosthwaite said: "There's a lot of synergy with Darty in terms of their systems and distribution. He pointed out that in January But shares were trading at Fr374 in France so a deal at no more than Fr300 would be "quite a keen price".
Nick Bubb of Societe Generale Strauss Turnbull said the deal would represent "a big bet on the French economy". He said the potential to integrate systems and buying power with Darty made the deal attractive "unless there has been a big deterioration in But's trading".
Kingfisher has been in expansionary mood recently. It offered around pounds 500m for the 135 Littlewoods high street stores but the deal foundered on price. Kingfisher had wanted to sell on some of the stores but retain others to expand its Woolworths and Superdrug chains.
In addition to a disagreement on valuations, Kingfisher was unhappy with some of the conditions attached to the deal, which would have seen it running the stores as going concerns for longer than it had wanted.
Kingfisher shares have been recovering sharply since their collapse after a shock profits warning a couple of years ago. In May Kingfisher issued an upbeat trading statement at its annual meeting. B&Q, its DIY business, has been boosted by the rising housing market. It reported like-for-like sales up by more than 14 per cent. Same store sales at Comet were 10 per cent higher.
Kingfisher is starting to explore overseas opportunities for B&Q. It has opened a store in Taiwan and hopes to expand more in the Far East if it can successfully convert the locals to the joys of do-it-yourself.