Provided competition laws don’t get in the way, the acquisition of Mr Bricolage would make Kingfisher the leading French home improvement group.

Why are we talking about this now?

Kingfisher, Europe’s biggest home improvement retailer, revealed today (April 3) that it is in talks about a €275m acquisition of Mr Bricolage, a business with 516 stores, mainly franchised, in France.

On last year’s numbers, Mr Bricolage would bring sales of €552.1m and pre-tax profit of €17.2m.

The deal would also give Kingfisher a presence in two new foreign markets – Belgium and Bulgaria, where Mr Bricolage has 43 and seven stores respectively.

Negotiating the deal is likely to be a lengthy process. Kingfisher will spend the coming months talking to a multitude of franchisees who own 435 of the French stores about its offer, including “improved commercial terms” as a sweetener to its potential new partners.

The likelihood is that the vast majority of the stores will carry on as Mr Bricolage franchises, but it’s also possible that Kingfisher will take some back into direct ownership.

So what is Mr Bricolage?

Mr Bricolage is a big name in French home improvement. More of a ‘convenience DIY’ specialist than Kingfisher’s Castorama and Brico Depot chains in France, its eponymous stores tend to be relatively small and in urban locations, including the centre of Paris. The business includes a smaller brand, Briconault, aimed at trade customers.

Mr Bricolage’s franchise network, although not Kingfisher’s standard business model, is part of the appeal.  With growth a priority, a Kingfisher spokesman said that the franchise structure was a “potential avenue of growth”, so expect to see more locations added once the deal is sealed. All the stores in Belgium and Bulgaria are franchised. Both countries were on Kingfisher’s list of target markets.

Doesn’t Kingfisher already have a strong enough presence in France?    

Kingfisher’s 1998 tie-up with Castorama, including the Brico Depot chain, turned the British retail group into a big-hitter in the French home improvement market overnight.

Since then expansion of the store network to 214 branches across the two brands and investment in online operations have taken Kingfisher to the number-two spot in the French market by sales, just behind market leader Group Adeo which owns the Leroy Merlin.

The Mr Bricolage deal would put Kingfisher out in front, as long as competition laws don’t throw up any problems.

The tie-up might also create multichannel opportunities, particularly to develop a click-and-collect operation. At present Kingfisher does not offer such a service in France but Mr Bricolage’s urban estate offers convenience locations which would be ideal for a click-and-collect offer.

Are there any competition issues?

French competition rules are influenced by local implications more than by the big picture nationwide.

So while the deal with Mr Bricolage would make Kingfisher more powerful in France generally, the authorities will be more concerned about how local competition is affected rather than with overall market share.

Because most of Kingfisher’s French stores are out-of-town and Mr Bricolage’s predominantly in smaller, more urban locations, it looks unlikely that the authorities would have a huge problem with the deal.