Discount retailer B&M in line for sale

Simon, Bobby and Robin Arora bought B&M, a discount retailer, in 2005 when it was still a loss making business with less than 20 struggling stores. Seven years on, the company has £1bn of sales, 290 stores and 2m customers a week.

The brothers, led by ex-Barclays and 3i executive, Simon, have hired Rothschild to look at selling a significant stake in the company, which has grown both sales and profits at around 25pc a year, for the last four years.

A small selection of private equity investors, including CVC, have been invited for talks that could see them take majority ownership in the discount retailer. The deal is also likely to include a new, enlarged bank facility.

B&M has gone from being a forgotten regional discount chain to national powerhouse transforming Britain’s retail landscape, opening stores at a rate of one a week. It has a workforce of more than 10,000 and earnings before interest, tax, depreciation and amortisation is £90m for the most recent financial year, up 25pc on 2011.

The company is the latest value retailer attracting external investment interest as the market becomes polarised between luxury brands and budget stores.

Poundland, a much smaller rival, was sold in 2010 for a multiple of 9.7 times earnings, which in B&M’s case would translate into a £873m price-tag. The recent sale of Iceland to a consortium led by founder Malcolm Walker saw the supermarket change hands for £1.4bn as investors took advantage of one of the few areas of the retail economy benefiting from recession.

The Aroras have used the recession to their advantage, snapping up plum sites from struggling competitors, such as Woolworths, DIY Focus and Kwik Save, and turning them into new B&M outlets.

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