Focus Wickes chairman poised to make £300m in £1.4bn float

Click to follow
The Independent Online

Focus Wickes, Britain's second-largest DIY retailer, yesterday confirmed it would float on the stock market within the next few months, with a valuation of about £1.4bn.

The move sets the scene for a race to market with Homebase, Focus' rival and the number three in the DIY sector, which signalled last week that it had appointed advisers to plan for a £1bn flotation.

Bill Archer, chairman and founder of Focus, holds about 20 per cent of its shares and stands to make a paper fortune of nearly £300m in the process.

Duke Street Capital, Focus' biggest single shareholder with a 55 per cent stake, will see its £150m investment turned into a holding worth £700m.

Mr Archer and Duke Street are expected to reduce their holdings in the company on flotation. They are still thinking about the level of reduction, which is not expected to be dramatic.

Mr Archer has aggressively expanded the business in the last few years. Having acquired the Do It All chain from Boots, in 2000, he bought Wickes for £289m, followed by Great Mills from RMC.

Mr Archer said: "The acquisitions established Focus Wickes as one of the UK's largest DIY retailers. Having completed the initial phases of the integration, flotation will strengthen and enhance our plans for future expansion."

Focus, which is being advised by Goldman Sachs and ING Barings, plans to have the flotation away by the end of the third quarter, but may complete it as early as July. Bankers value the business at between £1.2bn and £1.5bn.

Focus is coming to the market at a time then Britain's DIY market and gardening sector are booming, on the back of a buoyant housing market and a shift towards people taking more of an interest in doing up their properties.

Verdict, the retail research specialists, believes the DIY market has seen 6.3 per cent annual compound growth since last year, and predicts it will continue until 2006. Verdict also says that DIY and gardening plus the more specialist builders' merchant sector create sales of £21bn a year.

Focus, which rejects the notion that home improvement is reliant on a bullish housing market, aims to develop both of its brands in the next few years.

It will open 10 Focus stores and five Wickes stores annually for three years. Unlike its major rivals, Focus covers both the amateur home improvement end of the market through Focus and the heavier building side through Wickes. In contrast Homebase has become increasingly focused on the light end of the market.

Homebase was bought by the private-equity firm Permira for £750m from J Sainsbury in March 2001. Permira has appointed Deutsche Bank, Schroder Salomon Smith Barney and UBS Warburg to advise on a possible listing.

Homebase and Focus are struggling against the market leader, B&Q, which is owned by Kingfisher. But smaller companies believe there is plenty of room for expansion.

Focus has annual sales of £1.46bn and last year reported operating profits of £106m.