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B&M Bargains confirms flotation plans

Discount retailer B&M Bargains has confirmed plans to float on the London Stock Exchange later this year.


B&M Bargains confirms flotation plans

Discount retailer B&M Bargains has confirmed plans to float on the London Stock Exchange later this year.

Currently owned by the Arora family and private equity firm Clayton Dubilier & Rice, the company said the flotation would position it for the next phase of development as it looks to expand both in the UK and continental Europe.

Founded in 1978 from its first store in Blackpool, B&M has since grown its business to over 350 stores and employs over 13,000 staff across the UK. In the year to 29 March 2014, revenues rose by 28% to £1,272 million while adjusted EBITDA was 24% higher at £130 million. Meanwhile, like-for-like revenues climbed by 6.5%.

B&M said it is aiming to replicate the success of Dollar General in the US through its expansion in Europe as it believes the business models of both companies share many similarities. Dollar General has more than 11,000 stores with revenues of over $17 billion.

As part of its expansion plans, B&M has recently acquired an 80% shareholding in JA Woll, a large out of town general merchandise retailer in Germany. JA Woll reported revenues of €163 million and adjusted EBITDA of €15m in the year ended 31 December 2013.

B&M chief executive Simon Arora said: “B&M comes to the market with a strong track record of growth in revenues, profits and cashflow and has a proven business model that offers customers sensational value.

“We have built a high-growth retailer which customers love and which has so much potential still to be realised – approximately 66% of the population does not have easy access to a B&M store and we believe there is room for around 850 stores across the UK.

“Over recent years the UK has witnessed a sustained structural shift towards value retailing among consumers. Shopping habits have changed permanently as a result, with B&M completing about 2.7 million transactions a week. As the success of Aldi and Primark demonstrates, everyone loves a bargain.

“By leveraging a lean, cost-efficient business model, with strong supplier relationships and direct sourcing, we give our loyal customers what they are looking for across a range of different price points and categories.”

Simon and Bobby Arora will retain the majority of their shareholdings in B&M following the transaction and will continue to lead the business.

In preparation for the flotation, B&M has appointed four independent non-executive directors with experience of the retail and FMCG sectors. These include Thomas Hübner, a director of Carrefour; Ron McMillan, a director of N Brown Group; Harry Brouwer, executive vice president of Unilever Germany; and Kathleen Guion, a director of The Pantry Inc and True Value and a former division president and executive vice president of Dollar General Corporation.

B&M non-executive chairman Sir Terry Leahy said: “B&M is a first-class business operating in a genuinely exciting segment of the retail market, driven by a founder-led, ambitious and entrepreneurial management team. The business has delivered impressive growth as a private company, but there is much more to come. I believe B&M has a bright future and that its listing on the London Stock Exchange will position the Company for its next stage of development.”

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