Strategic alliance
Kingfisher PLC
27 November 2001
EMBARGOED UNTIL 0700 HOURS
Tuesday 27 November 2001
KINGFISHER AND HORNBACH FORM STRATEGIC ALLIANCE
Kingfisher plc, the leading European retailer, announces that it has entered
into an agreement to acquire a strategic stake of 25% plus 1 share of the 4
million voting ordinary shares of Hornbach Holding AG, the leading warehouse
player in the German DIY market, with activities also in several other EU
countries.
The investment represents a further step forward for Kingfisher's strategy of
developing market-leading positions in key European home improvement markets.
It is expected to be earnings enhancing for Kingfisher in the first full year.
The 25% stake will be purchased from the Hornbach family, which will retain the
remainder of the voting stock. In addition to its ordinary shares, which
constitute half of the total share capital of Hornbach Holding, the business
has 4 million non-voting preference shares. Kingfisher will account for it as
an associated company taking in 12.5% of Hornbach's net income.
Hornbach Holding holds 80% of the publically-quoted Hornbach-Baumarkt-AG. This
fast expanding 74-strong chain trades under the Hornbach name and features the
highest average store size in German DIY, at 9,700 square metres. It has
achieved the highest sales per store and sales per square metre in its sector.
The business is on schedule to open five new stores in Germany during the
current year, slightly ahead of its recent annual rate of openings.
Hornbach-Baumarkt has also expanded internationally with a total of 16 stores
in Austria, the Netherlands, Czech Republic and Luxembourg.
Hornbach Holding has achieved a compound annual sales growth of 13% over the
last five years and has consistently grown market share and traded profitably
over this period. The net asset value of the business as at 28 February 2001
was DM 701 million (£223 million). Its gross sales in the twelve months to
that date were DM 3,068 million (£975 million), up 12.4% on the previous year
and its net income was DM 53 million (£16.8 million).
Commenting on the move Kingfisher's Chief Executive, Sir Geoffrey Mulcahy,
said: ' We have the highest respect for what Otmar Hornbach has achieved in
building such an outstanding business. Kingfisher is already the leading home
improvement retailer in Europe, through its market leading positions in the UK
and France, and we are looking forward to participating in Hornbach's future
growth in Europe's largest market. '
Albrecht Hornbach, Chairman of the Management Board of Hornbach Holding, added:
'The international growth of the Hornbach Group will acquire a new quality and
additional dynamism through the commitment of Kingfisher.'
Kingfisher's investment will entitle it to two seats on the six-member
Supervisory Board of Hornbach Holding and one seat on the Supervisory Board of
Hornbach-Baumarkt. The shareholder agreement provides for a mutual right of
first refusal in the event that either party wishes to reduce its shareholding
in the future.
Kingfisher's acquisition of its stake in Hornbach is conditional on clearance
by the German and Austrian competition authorities.
- end -
Notes to editors:
1. The non-voting preference shares in Hornbach Holding are quoted on
the Frankfurt Stock Exchange. They are widely held by third parties
and were valued on 26 November at Euro 50.50 each.
2. Shares in Hornbach-Baumarkt are listed on the German Stock Exchange
in floating-price trading and also on on the SMAX. On 26 November
they were valued at Euro 24.95 each. The 20% minority interest, of
around 3 million shares, is held by independent shareholders.
3. Kingfisher plc is one of Europe's leading retailers operating
principally in the international Home Improvement, Electrical and
Furniture markets. More than half of the Group's turnover arises
overseas, making it the UK's most international retailer. Kingfisher
employs around 90,000 people in over 1,300 stores across 16 countries
and includes some of the best known retail brands in Europe including B
&Q, Castorama, Comet, Darty and BUT.
4. Hornbach Holding AG, through its subsidiary Hornbach-Baumarkt-AG,
operates 90 stores in five European countries with a total sales area
of 847,000 square metres. It also has three separate garden centres
(13,350 square metres in total) which trade under the umbrella of
Hornbach Florapark GmbH. Hornbach is the DIY warehouse market leader
in Germany with an average sales area of more than 9,700 square metres
for each DIY store. The sales of Hornbach Holding are expected to be
more than DM 3.4 billion in the current financial year.
Further enquiries:
Broker and Institutional Enquiries
Ian Harding, Director of Investor Relations +44 (0) 20 7725 4889
Media Enquiries
Andrew Mills, Director of Corporate Affairs +44 (0) 20 7725 5776
France
Graham Fairbank, Head of Corporate Communications +33 (0) 1 43 18 52 26
Kingfisher plc +44 (0) 20 7724 7749
Kingfisher Website www.kingfisher.com
Duncan Campbell-Smith, The Maitland Consultancy +44 (0) 20 7379 5151
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