UK discounter B&M has acquired 95 stores from French retailer Babou.
95 stores acquired for €91.2m
Babou's 95 stores have been acquired by B&M for a sum of €91.2m. The deal was paid for in cash, financed by a load facility, and included the refinancing of Babou's debt. Turnover for the French retailer in the year ending 31 January 2018 was €347.1m (c.£303.1m). This equates to c.10.2% of B&M's latest FY18 group turnover at £2.98bn.
Talking about the acquisition, B&M chief executive Simon Arora has said, "B&M has made no secret of its European growth plans since its initial public offering in 2014. We are delighted that discussions with Babou over a 3 year period have led to today's transaction, which provides us with a platform for future growth in a large and attractive market whilst also providing a stable and logical new owner for Babou."
Expansion of European variety discount business
The deal marks B&M's second entry into a new market outside of the UK. In 2014, B&M extended its operations to Germany with the acquisition of variety discounter Jawoll.
Babou targets families, offering c.30,000 SKUs across clothing, general merchandise and seasonal items. B&M has a limited range in clothing, so this could be an interesting development. However, we expect the overall offer to evolve following the acquisition to align more with B&M's UK proposition. See our latest B&M store visit report here to understand B&M's UK retail business.
Babou stores are predominately out of town and larger than B&M stores with an average size of c.27,000 sq ft (B&M stores average at 19,500 sq ft).
What do we think?
The move into France is a considered one as the variety discount channel in France is currently relatively under-developed. The two players within the channel currently include Action and Dealz (currently being trialled by Poundland parent company Pepkor Europe). B&M brings a wealth of experience from the UK and Germany, and acquiring a developed business will help to accelerate B&M’s progress in France.
Want to know more?
Retail Analysis subscribers click below to access the following insight reports:
France country presentation
Discounters in France
UK discount: factors influencing future growth