Castorama steps up offensive

FRENCH DIY chain Castorama has stepped up its offensive against Kingfisher with a series of full-page ads in the French press. It is trying to scupper plans by the British retailer to take full control by buying out the 45% minority stake.

Kingfisher will ask its shareholders to approve the £3.2bn deal in London today. It wants to launch a £2bn rights issue to help fund it.

Boss Sir Geoffrey Mulcahy is hoping for a trouble-free meeting. He appears to have convinced his own investors that the takeover makes sense, but it is Castorama's management that is causing him problems.

Kingfisher, which also owns B&Q and Comet, wants to sell or float the electricals arm and focus on DIY. Castorama chief Jean-Hugues Loyez said Kingfisher's offer of e67 (£43.40) a share is too low. He voiced his objections in an 'open letter' in French newspapers Les Echoes and La Tribune. Ultimately, investment bank Rothschild, which has been appointed adjudicator, will decide if the price is fair.

Rothschild has until 7 July to assess the offer price, but may rule earlier. It is being paid nearly £5m for one month's work and has 15 bankers working on the case. If the bank opts for a higher price, Kingfisher will have three months to decide whether to pay up.

Castorama shares were 67.45 euros in Paris, suggesting investors expect the deal to go through around that level.