Kingfisher buys stake in Hornbach to boost DIY interests in Germany

Sir Geoff Mulcahy, chief executive of the Kingfisher retail group which owns B&Q and Comet, moved to re-establish his dealmaking credentials yesterday when Kingfisher acquired a 25 per cent stake in the German DIY group Hornbach Holdings. The price of the deal was not disclosed.

The deal gives Kingfisher a strategic stake in the fourth-largest DIY group in Germany. The German DIY sector is the largest in Europe and is twice the size of the UK market. The deal also acts as a potential block on the US DIY giant Home Depot, which could have used Hornbach as a way of moving into Europe.

Sir Geoff has been courting the family-controlled Hornbach for years and has regularly been linked with a takeover. The deal means Kingfisher now has substantial retail interests in Germany as well as France, where it already owns the Darty electrical business and a 55 per cent stake in the Castorama home improvement chain. In Germany, Kingfisher owns the Promarkt chain of electrical stores though the business has been struggling and is currently loss-making.

Hornbach Holdings has an 80 per cent stake in the publicly quoted Hornbach Baumarkt group. It has 74 stores most of which are large out-of-town stores similar to B&Q's Warehouse format. It also has 16 stores outside Germany, in Austria, the Netherlands, the Czech Republic and Luxembourg.

Hornbach had net asset value of £223m as of 28 February. Last year, it recorded net income of £16.8m on sales of £975m.

Kingfisher will have two seats on the six member supervisory board at Hornbach Holdings and one seat on the board of Hornbach Baumarket. The group will have right of first refusal if the Hornbach family wishes to reduce its stake.

Sir Geoffsaid: "We have the highest respect for what Otmar Hornbach has achieved in building such an outstanding business."

Kingfisher shares climbed 13.5p to 411.5p yesterday.