Kingfisher-Bricolage deal foundering over planned store sales

(Adds details, source)

By Dominique Vidalon

PARIS, March 25 (Reuters) - Kingfisher (LSE: KGF.L - news) 's takeover of Mr Bricolage looked increasingly shaky on Wednesday as the French DIY stores chain revealed its franchisee shareholders were unhappy with the number of stores the buyer planned to sell to win antitrust clearance.

On Tuesday, Kingfisher, Europe's No. 1 home improvement retailer, had already cast doubt on the deal, which values Mr Bricolage at 275 million euros ($301 million) including debt.

It said it had been told that the majority of the board of Mr Bricolage and majority shareholder ANPF, which is held by franchisees, had reservations about the deal.

"The Board of Directors of Mr Bricolage believes that had the commitments proposed by Kingfisher been implemented, it would have led a large number of stores under the Mr Bricolage and Les Briconautes brands to exit France definitively," Mr Bricolage said in a statement.

A source close to the matter said Kingfisher had proposed to sell about 60 stores in France to meet antitrust concerns, well beyond what had been anticipated by the French camp. Mr Bricolage has 797 stores in France, the bulk of them run by franchise holders.

In April 2014 Kingfisher entered exclusive talks with Mr Bricolage's two main shareholders to buy their shareholding for 15 euros a share, subject to anti-trust clearance.

It was planning subsequently to make a mandatory offer to buy out minorities.

Kingfisher, the owner of B&Q, the market leader in Britain, had proposed to buy 41.9 percent from Association Nationale des Promoteurs de Faites Le Vous-Meme (ANPF), a group of franchisees, and 26.2 percent from the Tabur family.

The deal would add Mr Bricolage to Kingfisher's Castorama and Brico Depot brands in France, its most profitable market. It was submitted to French competition authorities in late January.

Mr Bricolage said it now awaited Kingfisher's position.

Mr Bricolage said it would communicate about any developments regarding the merger plan as soon as possible.

Until then Mr Bricolage shares remain suspended.

The deal is seen as the first test for Kingfisher's new chief executive, Veronique Laury, who replaced Sir Ian Cheshire on Dec (Shanghai: 600875.SS - news) . 8 and is due to present 2014-15 results on March 31.

($1 = 0.9122 euros) (reporting by Andrew Callus and Dominique Vidalon; Editing by Michel Rose)