Home Depot emerges as favourite to bid for B&Q

HOME Depot, the world’s biggest DIY retailer, has emerged as the most likely bidder for the struggling B&Q, but only if the British chain is willing to dispose of its French business.

B&Q-owner Kingfisher took full control of Castorama in France following a 2 billion rights issue in 2002. According to industry sources yesterday, the move has been discussed between Kingfisher chief executive Gerry Murphy, chairman Sir Francis Mackay and Bob Nardelli, Home Depot chairman and chief executive.

It is believed that Nardelli told Murphy and Mackay he was enthusiastic about Kingfisher’s operations in China and the UK, where B&Q is the biggest DIY chain, but that Castorama was a stumbling block, as strict French employment laws would make any proposals to change the operation difficult, and Home Depot did not want its first foray into Europe to damage its brand.

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Kingfisher, contacted by the Takeover Panel last week to clarify the position with Home Depot after shares rose 3.5 per cent on takeover speculation, would not comment, other than to say that the discussions were "routine" about product and supply terms.

However, according to the source, Home Depot also floated the possibility of a joint venture between the two companies in China.

Kingfisher already has a firm foothold in China, with about 50 stores, and the US DIY giant is keen to establish a presence there also.

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