Kingfisher rises on chief's fall

Kingfisher Plc said yesterday that Chief Executive Gerry Murphy would step down in February, boosting its shares on speculation of a bid for, or break up of, Europe's biggest home improvements retailer.

The owner of UK market leader B&Q and Castorama in France also said it expected a third-quarter trading update, due on November 29, to confirm a continued positive performance from its international businesses, but a tough environment in the United Kingdom.

The UK's home improvements retailers are battling a slowdown in consumer spending on big-ticket items, like bathrooms and garden furniture, and a drop in housing transactions following a series of interest rate rises.

This has sparked speculation of a bid for, or break-up of Kingfisher, which runs about 760 stores in 10 countries.

"The overseas business is doing well and there's the property attractions," said Pali International analyst Nick Bubb.

Kingfisher said in March that its property assets were worth around 3.2 billion pounds, which compares with its current market value of about 4.4 billion pounds.

But Bubb was sceptical whether a bid would surface, given the problems at B&Q and the difficulties private equity firms would have raising debt in the current credit market logjam.

He said Murphy's departure could also spell bad news for shareholders, such as a cut in the dividend payment.

Stock rises

Kingfisher shares jumped as much as 5 percent in early trade, but by 0850 GMT had retreated to trade up just 0.1 percent at 197.4 pence.

"Clearly Mr Murphy's departure is likely to stimulate interested parties to look at the group again," Credit Suisse analysts said in a research note. But they also thought bidders could be put off by the potential cost of turning round B&Q.

Kingfisher said Murphy, who has been chief executive for five years, would step down on February 2, at the end of the group's financial year, and that it would look both inside and outside the company for a successor.

Analysts said the Ian Cheshire, the head of Kingfisher's B&Q business, was the most likely internal candidate.

A spokesman declined to comment on the details of Murphy's departure or on his likely successor.

Kingfisher shares have underperformed the DJ Stoxx European retail sector by 27 percent this year.

Agencies

(China Daily 11/02/2007 page16)