French home improvement retailer Groupe Adeo S.A. buys Italian business for €560m.
Kingfisher today announced a binding agreement to sell Castorama Italy to Groupe Adeo S.A. for a total cash consideration of €560m (approximately £440m), before an adjust for profit generated from July 1 2008 to completion. Kingfisher will retain the French arm of the company.

Groupe Adeo already owns french home improvement retailer Leroy Merlin, second only to Castorama in the French market, and the BricoCenter and Bricoman brands and had sales of €9bn last year.

The sale must await European Community Merger Regulation clearance and is expected to complete during the fourth quarter of 2008.

The proceeds of the sale will be used to reduce Kingfisher Group's net debt.

Castorama opened its first store in Italy in 1988 and now operates across 31 branches, employing over 2,200 people. In the 12 months to February 2, 2008, the business recorded a retail profit of £29m and sales of £314m.

Commenting on the sale, Kingfisher's group chief executive, Ian Cheshire said: "This sale is consistent with our aim of delivering a step-change in shareholder value and is a good deal at this point in the economic cycle.

"We have built a successful and profitable business in Italy, which now needs more capital to continue its development. We believe we can achieve higher incremental returns on capital elsewhere in Europe and strengthen our balance sheet by reducing our net debt."

He concluded: "I wish the business continued success under its new owners and personally thank all our colleagues at Castorama Italy for their hard work and commitment over the years."