Kingfisher rethinks Comet float

FALLS in the stock market values of retailers are forcing Kingfisher to rethink plans for a flotation of its electricals business, opening the way for an offer from Dixons.

Six months ago, Kingfisher unveiled plans to reshape its business, taking full control of French DIY operation Castorama and integrating it with its British arm, B&Q.

New chairman Francis Mackay said the electricals operations, Darty in France and Comet in Britain, would be put into a separate business to be floated in Paris next spring.

But now, Kingfisher insiders have conceded that the fall in retail share prices is making the idea of flotation increasingly unlikely. 'The idea of a trade sale has certainly moved up the agenda,' a company insider said, 'but at this stage, it is a fluid situation.'

A spokesman, however, insisted falling stock markets would not affect the demerger. 'The position remains unchanged,' he said. 'We are still intent on securing a successful flotation for the business in the spring of next year.'

Kingfisher, led by veteran chief executive Sir Geoff Mulcahy, is concentrating on the integration of the French DIY business with B&Q after an acrimonious fight this summer to secure control.

If Kingfisher decides simply to sell its electricals businesses, the most likely buyers are Dixons or Metro of Germany, which already controls Media Markt, a major electricals retailer in Germany, Austria and Switzerland. TTwo venture capital groups have also expressed interest. The price could be between £1.5bn and £2bn.

If Dixons buys Kingfisher's electricals arm, it would be forced to sell Comet to satisfy competition watchdogs in Britain.

Comet accounts for roughly a third of the overall business's sales, but its profits are eclipsed by those of Darty in France. The operation also includes businesses in Germany, Belgium, the Netherlands and the Czech Republic.

Kingfisher will this week unveil figures for the six months to July. They are likely to show faltering sales growth in DIY. The group had hoped to name a new chief executive this month to take over from Mulcahy. It is understood that Mackay has a shortlist of two, but will not be able to name a candidate until October.