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US private equity firm buys significant stake in B&M Bargains

US private equity house Clayton Dubilier & Rice (CD&R) is planning international expansion for discount retailer B&M Bargains.

CD&R has taken a "significant stake" in a deal which may have valued the chain at more than £900m.

B&M will continue to be managed by its existing management team while former Tesco chief executive Sir Terry Leahy, a senior adviser at CD&R, will serve as chairman

The Liverpool-based group, owned by three Cheshire brothers Simon, Bobby and Robin Arora, has been on the market for some time with a price tag of around £850m, but there has been some speculation that the transaction valued the business at £965m. The financial details were not disclosed. The process was being led by investment bank Rothschild.

According to earlier reports, the parties that made the second round of bidding were Blackstone, BC Partners, KKR - the owner of Handforth-based Pets at Home - Bain Capital and CD&R.

The business made profits of £38m profit last year on sales of more than £713m. It now employs more than 9,000 people and the success of its model is down to not only to consumers seeking low prices, but its savvy stock buying.

David Novak, a partner at CD&R, said: "B&M is a fantastic retail format in the growing discount sector. We are pleased to have the opportunity to partner with the management team to accelerate the growth of the business by widening its market presence outside of the UK, and continue to build the B&M brand. We believe the value based general merchandise retail model could have significant appeal in overseas markets."

Simon, Bobby and Robin Arora said: "We are delighted to have the opportunity to partner with CD&R. We are proud of the success we have had with B&M since acquiring it in 2005, but recognise that we need a partner to bring the expertise to ensure the business fulfils its overseas potential.

"CD&R has very relevant retail sector experience and a strong track record of working in partnership with management teams to successfully grow businesses across different territories."

CD&R was advised by Bank of America Merrill Lynch, Clifford Chance, Debevoise & Plimpton, Ernst & Young and Bain & Co. B&M was advised by Rothschild, Allen & Overy, PWC and OC&C.

Source : James Graham - The Business Desk

04 December 2012
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Thank you for the excellent presentation that you gave at Woodbury Park on Thursday morning. It was very interesting and thought-provoking for our Retail members. The feedback has been excellent.

Martin Elliott. Chief Executive - Home Hardware.

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