B&Q China Stake Sale Nets Owner £140m

The owner of B&Q has sold a controlling stake in its loss-making China operation for £140m.

Kingfisher, which owns the DIY chain, said it planned to use the cash to invest in its core European market which includes the B&Q and Screwfix brands in the UK.

The firm said it had reached a binding agreement with fellow retailer Wumei Holdings to hand over a 70% stake in B&Q China, which began operations in 1999 and has since grown to 39 stores employing more than 3,000 staff.

Kingfisher had previously said it was looking for a strategic partner to help develop its Chinese business.

The deal is conditional on Chinese Ministry of Commerce approval and, if approved, is expected to close during the first half of next year.

Veronique Laury, Kingfisher chief executive, said: "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."

Wumei's interests include 650 supermarkets and 10 department stores which operate in northern, eastern and western China.

Its experience in the Chinese market is a critical factor behind the deal.

Kingfisher had looked to cash in on the economic boom in the country but, like firms including Tesco, it has found Asia a tough nut to crack with problems including high costs and tough local competition.

The recent slowdown in the Chinese housing market had proved to be a new headwind though annual losses had been stemmed to £6m in B&Q China's last financial year.

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