The deal was made through B&M’s subsidiary, EV Retail Limited, and totalled €91m (£80m) including the debt of the Babou refinanced by B&M.
For the year ending 31 January 2018 the Babou Stores Group delivered revenues of €347.1m (£327m), EBITDA of €24.7m (£21.7m) and profit before tax of €100,000 – after a goodwill amortisation €10.7m (£9.1m).
B&M said the acquisition of Babou will “provide a base which will enable B&M to develop and grow in France its proven and profitable value retail model”. It also said its strategy for the Babou business is to apply B&M’s direct product sourcing and limited assortment SKU model, while refining Babou’s product offering.
Babou is currently led by Thierry Morter who is retiring from the business as part of the transaction, and will be succeeded by Cedric Mahieu as CEO.
Mahieu has been employed by B&M since January 2018 in expectation of this transaction and has been working with the B&M team to develop the integration plan for Babou.
The company added that acquisition is expected to be immediately earnings enhancing. However, the first 12 months of ownership will be a “period of transition as the acquired business realigns its product offering closer to that of B&M, which will impact the level of Babou’s earnings in the short term”.
Simon Arora, CEO of B&M said: “B&M has made no secret of its European growth plans since its IPO 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.
“We would like to welcome all Babou’s employees and stakeholders to the wider B&M family and look forward to a successful future together.”
B&M was advised on the transaction by BofA Merrill Lynch, Ernst and Young and LPA-CGR Avocats, with Debevoise and Plimpton advising on acquisition financing. The acquisition financing was provided by BNP Paribas.