B&M Retail Said to Seek $4.5 Billion Valuation in London IPO

B&M European Value Retail Chairman Terry Leahy
A sale price of 270 pence implies a valuation of 2.7 billion pounds ($4.5 billion) for B&M European Value Retail SA, whose chairman is former Tesco Plc boss Terry Leahy. Photographer: Andrew Harrer/Bloomberg

U.K. discount retailer B&M European Value Retail SA plans to price its initial public offering at 270 pence, above the midpoint of an announced range, according to two people with knowledge of the matter.

The sale has demand for all the shares at that price, said the people, who asked not to be named because the process isn’t complete. A sale price of 270 pence implies a valuation of 2.7 billion pounds ($4.5 billion) for the retailer, whose chairman is former Tesco Plc boss Terry Leahy. Trading will begin in London tomorrow.

B&M is the latest in a line of U.K. retailers that have listed in 2014, marking the busiest year in the industry since 2006, data compiled by Bloomberg show. Pets at Home Group Plc, online appliance company AO World Plc and Poundland Group Plc, a discounter, are among retailers that have raised about 5 billion pounds through IPOs this year.

Some IPO plans are testing demand. Card Factory Plc, a greeting-cards retailer, priced its sale at the bottom of an announced price range and Fat Face Group Ltd., a clothing company, postponed its IPO this quarter as investors become more selective.

B&M, whose stores sell products from televisions to bed linen, has said it plans to raise about 75 million pounds in the IPO to reduce debt. Clayton Dubilier & Rice LLC will also sell a proportion of its holding in the retailer. The buyout firm acquired a “significant” stake in December 2012. The announced range was 230 pence to 290 pence, which was revised to 260 pence to 280 pence, according to people familiar with the matter.

Leahy Return

The IPO marks a return to the stock market for Leahy, who stepped down as chief executive officer of Tesco, a grocer and general retailer, in 2011. B&M has delivered “impressive growth” as a private company and has “much more to come,” he said in a statement last month.

Sales in the year ended March 29 rose 28 percent to 1.27 billion pounds, including growth of 6.5 percent at stores open at least a year. B&M added 42 outlets in the period.

Excluding an over-allotment option, 25 percent to 40 percent of B&M’s shares will be freely traded after the IPO, according to terms of the deal seen by Bloomberg News.

Goldman Sachs Group Inc. and Bank of America Merrill Lynch are managing the sale along with Credit Suisse Group AG and Deutsche Bank AG.

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