US DIY giant on brink of UK invasion

13 April 2012

AMERICAN do-it-yourself chain Home Depot is believed to be poised for an assault on the UK market, with Kingfisher seen as the most likely target.

Home Depot reached second place in the auction for Wickes, the Mail can reveal, but was pipped by builders' merchant Travis Perkins.

The US chain's decision to launch a firm bid for Wickes demonstrates that it is serious about crossing the Atlantic.

Retailers have feared for years that Home Depot would come to the UK and make life even more competitive. Some thought the weak dollar would be a deterrent but this is clearly not the case.

Home Depot is the world's third-largest retailer. After a few years of tough trading in its home market, the retailer appears to be back on track and ready for expansion.

It had sales of $64.8bn (£34bn) last year and made profits of $4.3bn, so would have had no trouble financing the £950m purchase of Wickes.

Yet it was prepared to lose the auction. This suggests Home Depot may have set its sights elsewhere. Perhaps it wanted to take a close look at the financial position of Wickes and its sister chain Focus to gain a better understanding of the UK homeimprovement sector.

Kingfisher (down 2p to 305p) owns UK market leader B&Q and would be the ideal prize. It has a market value of £7.1bn, but investors would probably want at least £9bn to back a takeover. Combining the two firms would result in huge savings in the cost of buying DIY goods.

It would also give Home Depot - which has stores in the US, Mexico, Canada and Puerto Rico - a major presence in the UK, France and China.

Next year may herald further consolidation in the DIY market. GUS, which owns Homebase, is tipped to bid for Focus and possibly furniture chain MFI. Kingfisher is also seen as a possible bidder for MFI.

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