Castorama directors check out of Kingfisher with £100m pay-off

The French directors of Castorama left the company with £100m between them yesterday after Kingfisher appointed Sir Geoff Mulcahy as chairman of the group. The five departing directors included Jean Hugues-Loyez, who led a passionate defence against Kingfisher's £3.2bn takeover of the company as the UK retailer bought out the 45 per cent of the business it did not already own.

Mr Loyez will receive £25m personally for his stake in the business. His departure follows Kingfisher's formal takeover of the French company last week after a protracted takeover that has dragged on for months.

The appointment of Sir Geoff as chairman of Castorama will be a blow to the French who have regarded the Kingfisher chief executive as a meddler who is difficult to deal with. Sir Geoff is due to start meetings with the second tier of Castorama management today. Further departures have not been ruled out as Kingfisher has long accused the French of dragging their feet over implementing changes. As a result the performance of Castorama has deteriorated.

Sir Geoff's role at Castorama means he may stay on longer as Kingfisher chief executive than many might have thought. The company announced months ago it would seek a replacement for the retail veteran who has been at the group since its inception 20 years ago. The company, now led by new chairman Francis Mackay, has said it would like to announce a new chief executive by the end of the year.

Kingfisher's attention will now focus on integrating Castorama more closely with B&Q and achieving cost savings.

The company will then move to the next stage in its restructuring which will see the demerger of its French electricals business. The preferred option is a float on the Paris market though the business may be the subject of a break-up bid. Dixons is known to covet the Darty operation in France while Comet in the UK might be attractive to venture capitalists. Kingfisher shares closed 8.5p lower at 204.5p, though the announcement of management changes came after the market had closed. The shares have jumped since the success of its £2bn rights issue, priced at 155p per share.