Home improvement group Kingfisher Plc announced on Monday it had agreed to sell a controlling 70% stake in its unprofitable B&Q China business for £140 million.
The all-cash deal with Wumei Holdings marks the end of a nine-month search for a domestic partner by the UK company. The agreement is subject to regulatory approval by the Chinese Ministry of Commerce and is expected to close during the first half of next year.
Wumei Holdings is one of Chinas leading retail operators, owner of brands like Wumart, Jingbei Shopping Mall, Merrymart and Xinhua Department Store. The chain store group manages around 650 supermarkets and 10 department stores.
“I am delighted to have found a strong retail partner who will help us to release the financial value of our business in China. This will enable us to focus our financial resources and management talent on the large and attractive European home improvement market,” said Kingfishers CEO Véronique Laury.
Ms. Laury was appointed as CEO earlier this month and replaced Ian Cheshire, who was at the helm for seven years. In March Mr. Cheshire said that Europes largest retailer, owner of B&Q and Screwfix in Britain and Castorama and Brico Depot in France, is actively looking to team up with a Chinese company so it would not be forced to exit the market.
China has proven difficult for many foreign companies, including Home Depot. In 2012 the US counterpart to B&Q announced that it is exiting the mainland market, at the time a spokeswoman for the company said China has more of a “do-it-for-me” culture, rather than “do-it-yourself”, mainly due to cheap labor.
In 2013, Germanys Metro pulled out of the Chinese consumer-electronics market as it closed all seven of its Madia Merkt stores. Earlier this month Best Buy announced the sale of its Jiangsu Five Star Appliance, with around 184 operating stores, to a Chinese real estate group.
B&Q China was first opened in 1999 and currently has 39 stores with more than 3 000 employees.
Kingfisher Plc edged up 0.25% on Friday and closed at GBX 324.20 in London. The stock gained 2.19% to trade at GBX 331.30 at 12:32 GMT, marking a one-year decrease of 12.95%. The company is valued at £7.63 billion. According to the Financial Times, the 20 analysts offering 12-month price targets for Kingfisher have a median target of GBX 305.00, with a high estimate of GBX 420.00 and a low estimate of GBX 255.00. The median estimate represents a 5.92% decrease from the last close price of GBX 324.20
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
