B&M European Value Retail SA has agreed a deal to buy French discount retailer Paminvest SAS, which operates France’s Babou chain, for €91.2mln.
The acquisition was made in cash and was financed through a loan facility and includes B&M’s refinancing of Babou’s debt, B&M said in a statement.
In the year to January 31, Babou reported revenue of €347.1mln and a pretax profit after goodwill amortization of €10.7mln. As of January 31, its gross assets stood at €289.4mln.
B&M said the acquisition would be immediately earnings enhancing but that Babou's earnings could be hit in the short-term by a change in products as it is brought into alignment with B&M’s product range.
"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 three 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," said B&M Chief Executive Simon Arora.
Alongside the deal, Babou has acquired its third-party distribution services provider for an additional €2.9mln, which was paid by B&M. The distributor's annual pretax profit in 2017 was EUR600,000.
Shares in B&M were 5.6% at 407.20p in early afternoon trade.