UK retailer B&M acquires French Babou stores

For the year ended January 31, 2018 the Babou Stores Group delivered revenues of €347.1 million, EBITDA of €24.7 million, profit before tax of €0.1 million (after goodwill amortisation €10.7 million). It operates in the discount retail sector, with approximately 30,000 general merchandise, seasonal and textiles SKUs.

The total enterprise value of the transaction is €91.2 million, which includes the debt of the Babou Stores Group refinanced by B&M. The consideration has been paid in cash financed by an additional loan facility. There is no deferred consideration payable in relation to the transaction. The transaction was has been completed, B&M said in a press release.

The acquisition of the Babou Stores Group will provide a base which will enable B&M to develop and grow in France its proven and profitable value retail model. B&M's strategy for the Babou business is to apply B&M's direct product sourcing and limited assortment SKU model, while refining Babou's product offering.  The average store size, location and customer base of Babou are comparable to the highly successful B&M Homestore operation in the UK. The French market, alongside the existing German and UK markets in which B&M operates, has attractive dynamics including overall market size, the popularity of the growing discount channel and the healthy operating margins achieved by several incumbent operators. 

"B&M has made no secret of its European growth plans since its IPO 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. We would like to welcome all Babou's employees and stakeholders to the wider B&M family and look forward to a successful future together." Simon Arora, CEO of B&M, said.

The Babou Stores Group is currently led by Thierry Morter. He will be retiring from the business as part of the transaction, and has been succeeded by Cedric Mahieu as the CEO. The acquisition is expected to be immediately earnings enhancing. However, the first 12 months of ownership will be a period of transition as the acquired business realigns its product offering closer to that of B&M, which will impact the level of Babou's earnings in the short term.

At the same time as the transaction, the third party distribution services provider to the Babou Stores Group, has been acquired by the Babou Stores Group from Logitex Sarl and Terrealame which are privately owned companies in France, on a debt free basis for an additional cash consideration paid by the B&M Group of €2.9 million. (RR)

ALCHEMPro News Desk – India