B&M May Get $4.9 Billion Value in Leahy’s Market ReturnRuth David, Paul Jarvis and Francesca Cinelli
B&M European Value Retail SA, the U.K. retailer chaired by former Tesco Plc boss Terry Leahy, is pressing ahead with an initial public offering that may value the discounter at as much as 2.9 billion pounds ($4.9 billion).
The shares will be offered in a range of 230 pence to 290 pence each, according to terms obtained by Bloomberg News, as the Liverpool, England-based company seeks to capitalize on a wave of IPO activity this year. Blue Inc Plc, a U.K. budget fashion retailer, also unveiled plans for an IPO.
The retailers are proceeding with plans to sell shares as a rising volume of deals tests demand. Investors have already stumped up about 2 billion pounds for shares of U.K. retailers such as Pets at Home Group Plc, AO World Plc and Poundland Group Plc in IPOs this year, data compiled by Bloomberg shows. That compares with 106 million pounds in all of 2013.
Last week was Europe’s busiest for IPOs in 2014, according to data compiled by Bloomberg, although U.K. insurance provider Saga Plc priced its sale at the bottom of an offered range and retailer Fat Face Group Ltd. canceled its offering.
Shares of companies that have gone public in Europe this year have underperformed the wider market. The Bloomberg European IPO Index, which tracks companies that have sold shares, has risen by about 1 percent in 2014, compared with a gain of about 5 percent in the STOXX Europe 600 Price Index.
B&M, whose U.K. 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 IPO marks a return to the stock market for Leahy, who stepped down as Tesco’s chief executive officer in 2011. B&M has delivered “impressive growth” as a private company and has “much more to come,” he said in a statement this 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.
Between 25 percent and 40 percent of B&M’s shares will be freely traded after the IPO, excluding an over-allotment option, the terms show. The final price is expected to be set on June 11, with share dealings set to commence on June 12.
Blue Inc, in which former Marks & Spencer Group Plc CEO Stuart Rose owns a 5.1 percent stake, plans to raise as much as 15 million pounds in its IPO and the shares will trade on London’s AIM. The funds will be used to support the growth of the male-focused retailer, which had about 240 U.K. stores at the end of last year and five overseas franchise outlets.
Sales at Blue Inc were 98.7 million pounds in 2013, having grown at an annual pace of 32 percent over the past five years.