Kingfisher demerger to cost £60m in fees

Kingfisher, the retail group, revealed yesterday that the planned demerger of its electrical retail division this summer will cost about £60m in advisory fees, £20m more than the demerger of Woolworths in 2001.

The electricals demerger is due to take place by the end of July on the London Stock market in a move that will leave the group free to concentrate on its home improvement interests which include B&Q in the UK and Castorama in France. The timetable is longer than planned as the company gives itself breathing space in the face of volatile stock markets and the looming war with Iraq.

The valuation of the electricals business, which includes Comet in the UK and Darty in France, is expected to be about £1bn, though this will depend on how Kingfisher's debt is allocated. There will be a secondary listing in Paris. No name has yet been chosen for the demerged company though the DIY business will continue to be called Kingfisher. The company said there would be no dividend cut as part of the demerger.

Kingfisher said it planned to exit its operations in Canada, Belgium and Brazil. Gerry Murphy, the chief executive, said: "We plan to focus on two areas: Europe and the Far East."

Reporting his first results since joining from Carlton Communications six weeks ago, Mr Murphy said he had been encouraged by the quality of the Kingfisher operation. The company reported a 17 per cent rise in full-year profits to £655m, for the year to 1 February, excluding exceptional items. The DIY division was again the star performer with profits up 24 per cent to £534m. Kingfisher shares fell 1.75p to close at 237p.

On the outlook for consumer spending Mr Murphy said: "The market could become more difficult. In tough times, people spend more time at home and are more frugal. Our focus on home improvement should serve us well."