‘Dumb time’ for Home Depot to target Kingfisher
US DIY giant to focus on store refurbishment
January 17 2004
Home Depot has denied rumours that a bid for UK counterpart Kingfisher is imminent, announcing plans to double spending on revamping existing stores.
A takeover of Kingfisher, operator of the B&Q chain, has been predicted for some time, and became more likely when Kingfisher demerged its electricals operation last summer to become a pureplay DIY retailer.
However, with the dollar weak against the euro, Home Depot chairman Robert Nardelli told journalists: “I couldn’t think of a dumber time to make an international acquisition with the euro at an all-time high. Just based on exchange, you’re going to be paying a premium.”
He added: “Are we aware of Kingfisher? Are we aware of some of the de-merging that has gone through? Sure. But we will not buy top-line growth. We will invest for top-line growth.”
He added that takeover speculation has pushed Kingfisher’s share price higher, making a takeover move even less sensible in the current economic climate. He said: “From a financial standpoint in currency, from an evaluation standpoint in premium based upon speculation, I couldn’t think of a worse time”
Home Depot sees 2004 global growth coming mainly from expansion of its chain in Canada and Mexico. However, with increased competition on it home territory from rival Lowe’s, Home Depot is projecting slower earnings growth for 2004 an plans to cut back on store opening during 2004 to focus on upgrading existing stores.
The company is investing in new product ranges and technology upgrades. Nardelli said: “Home Depot is creating dynamic stores through our offering of innovative and distinctive products, store modernisation efforts and investments in technology and store associates.”
