DIY GROUP Kingfisher said yesterday it had agreed to sell a 70 per cent stake in its loss-making B&Q China business to Wumei Holdings for £140m.
The deal came after the retailer announced in March that it was searching for a strategic partner to help grow its B&Q business in China, which is made up of 39 stores and employs 3,000.
B&Q first opened its doors in China in 1999, but the business has struggled to take off in what was a notoriously difficult DIY market.
The company has also been hit over the past year by a slowdown in China’s property market. It reported e-tail losses of £4m in the third quarter, while sales declined 10.6 per cent to £97m.
“I am delighted to have found a strong retail partner who will help us to release the financial value of our business in China,” said Veronique Laury, who succeeded Ian Cheshire as Kingfisher’s chief executive this month.
“This will enable us to focus our financial resources and management talent on the large and attractive European home improvement market,” she said.
Kingfisher, which trades as B&Q and Screwfix in the UK and Castorama and Brico Depot in France, is Europe’s biggest home improvement retailer.
Beijing-based Wumei has a retail empire comprising around 650 supermarkets and 10 department stores in northern, eastern and western China.
The deal is subject to approval by Chinese regulators. If approved, it is expected to close during the first half of 2015.
“The persistent problems of the B&Q business in China were one of the biggest blackspots on Cheshire’s record as chief executive, so perhaps it would be best to draw a veil over the whole affair and focus on the future,” retail analyst Nick Bubb said.