Focus Do-It-All, the privately owned DIY retailer, launched a surprise hostile bid yesterday for Wickes, its publicly quoted rival, valuing Wickes at £285m.
The 375p per share cash offer was immediately rejected by Wickes, which described it as "inadequate and opportunistic". Wickes shares soared 50 per cent to 402.5p as the City bet on a higher offer being made.
Focus said the deal would create a more powerful player in the consolidating DIY market which is increasingly dominated by B&Q. B&Q, part of Kingfisher, accounts for 20 per cent of the market followed by Sainsbury's Homebase with 11.7 per cent. A merged Focus-Wickes would put the combined company in touching distance of Homebase with an 11.1 per cent share.
Bill Archer, chairman and chief executive of Focus Do-It- All, commented: "The market is consolidating and we want to play a leading role in that. This is the first move to put two small companies together to create a company that will be strong in the UK and can be expanded in Europe."
Focus Do-It-All has 209 stores and was formed in 1998 when Focus paid Boots £58m for the struggling Do-It-All business. It recorded operating profits of £21.3m on sales of £572m last year.
Wickes has 130 stores aimed mostly at the DIY enthusiast and trade builder. It made profits of £23m on sales of £571m last year.
The company has been recovering from a financial scandal four years ago that led to a boardroom clear-out and write-offs which forced the group into a £279m loss in 1995. The scandal, based on the Wickes management, led by American Henry Sweetbaum, accepting supplier payments as profits - leading to a huge profit over-statement - led to a Serious Fraud Office investigation.
Bill Grimsey, appointed chief executive to lead the recovery in 1996 said yesterday: "Focus Do-It-All is trying to snatch the benefits of the store renewal programme and investment of several years on the cheap. This offer is thoroughly inadequate and opportunistic."
City analysts supported the logic of the bid but said Focus would have to increase its offer. Richard Ratner at Seymour Pierce, said: "This is the weaker company trying to take over a stronger one. There is a price for everything but this management has baled a lot of people out in the past."
Focus Do-It-All's major shareholders include Duke Street Capital, with 60 per cent. Mr Archer, a former sales manager at Crown Decorative Products, controls 20 per cent of the equity. Focus has broadened its scope with the introduction of pet food and gardening centres.
The DIY sector has been growing ahead of inflation. Half the market is still controlled by small, independent operators.Reuse content