Kingfisher will sell Italian DIY stores

Kingfisher, parent of European DIY chains Castorama and B&Q, will sell its Castorama Italy stores for 560 million euros (US$823.4 million).

Groupe Adeo, a Lille, France-based DIY chain, will take over the 31 Castorama stores in Italy pending regulatory approval from the European Union.

The first Castorama store was opened in Italy in 1988. Last year, the division reported $53 million in earnings on sales of $573 million.

Kingfisher said it plans to use proceeds from the sale to reduce the company’s net debt.

"This sale is consistent with our aim of delivering a step-change in shareholder value and is a good deal at this point in the economic cycle,” said Ian Cheshire, Kingfisher's group CEO. “We believe we can achieve higher incremental returns on capital elsewhere in Europe and strengthen our balance sheet by reducing our net debt.”

Adeo Group operates stores in France, Italy, Spain, Brazil, Portugal, Poland, Russia, Greece and China.