Kingfisher shrugs off 'emotional' attack by head of Castorama

Kingfisher yesterday criticised the French management of the Castorama DIY business, saying it had lost high-spending customers to rivals, under-invested in the business and treated the local DIY sector as a mature market rather than a growth one.

Sir Geoff Mulcahy, Kingfisher's chief executive, made the comments as the group issued its offer document for its £3.2bn bid to buy out the 45 per cent of the Castorama equity it does not already own.

However, despite the escalating hostility between the two companies, Sir Geoff said he was keen to retain the services of Jean-Hugues Loyez, Castorama's chief executive. This is despite an astonishing attack on Kingfisher made by the Frenchman at Castorama's annual meeting last week.

Sir Geoff said: "The Castorama management has taken the view that Castorama is a mature brand and has gone off and made investments in Germany, Brazil and elsewhere, which have not been profitable. The business has been losing market share to local competitors, particularly high-spending consumers to rivals like Leroy Merlin. The important thing is to get a unified management team installed." He would not reveal if Kingfisher would pull Castorama out of overseas markets if it won control.

Kingfisher, which owns B&Q in the UK, said it would implement a store renewal programme, improve core product ranges and reposition the Castorama brand further upmarket. An extraordinary meeting for shareholders to approve the deal has been set for 7 June.

Sir Geoff's comments follow a stinging attack by Mr Loyez last week when he accused Kingfisher of failing to understand the French market, adding that it would be a cultural disaster to move the head office to London. But the UK retail veteran said he was keen Mr Loyez stayed with the business.

"The most important thing is to retain the management team," he said. "We want Jean-Hugues Loyez to stay on to integrate the two firms. If the French team left, that would be very bad news," he said.

Sir Geoff said Mr Loyez's AGM rant was "a bit of emotional outburst", and defended Kingfisher's €67-a-share bid. He said there would be no compulsory redundancies and that he believed most Castorama staff were on Kingfisher's side.