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Dolphin owner sets sites on Bathstore

The private equity firm that owns Dolphin Bathrooms has held talks with Bathstore over a potential acquisition of the 170-store retailer.

The plumbing group Wolseley appointed Catalyst Corporate Finance to run a sale of Bathstore, the specialist bathroom retailer, this autumn and it hopes to sell the chain for between £70m and £90m. Wolseley has previously said it may sell up to 19 of its "non-core" businesses.

Sun European Partners – the owner of Homeform Group which operates the retail chains Sharps Bedrooms and Moben Kitchens, in addition to Dolphin Bathrooms – is believed to have held early-stage talks with Bathstore over a purchase that could deliver economies of scale.

In addition to the European arm of the US buyout firm Sun Capital Partners, other private equity firms are interested in Bathstore and are set to receive the sales memorandum over the coming days. It is unclear if the UK's three biggest DIY retailers, B&Q, Wickes and Homebase, are interested.

However, sources have questioned the reported price tag for Bathstore, adding that the retailer seems to have "not traded well" over recent years. One said that its performance was "very much correlated to the housing market", which is currently suffering from a mortgage famine and stagnating prices.

For the year to 31 July 2009, Bathstore delivered a pre-tax profit of £4.54m on sales of £106.7m, according to its latest accounts. In the report, the company said that in response to "difficult market conditions" it had cut its headcount by 124 and closed 19 stores. Including exceptional items of £16.8m, Bathstore made a loss of £12.28m over the period to July 2009.

Sun European Partners – which also owns the sofa chain ScS – acquired Homeform in April 2007. Wolseley, Catalyst Corporate Finance and Sun European Partners declined to comment yesterday.

Source : James Thompson - The Independent

07 December 2010

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