Focus DIY sold for £1

Focus DIY was sold for £1 today to private equity firm Cerberus.

Cerberus will pay off the retailer's £174m debts and pay £40m - 40p in the £1 - to bondholders of the Crewe-based company, which is the UK's third-largest DIY business.

The new owner will bring in former Wickes directors Bill Grimsey and Bill Hoskins as chief executive and finance director to help revive the business.

The deal comes after Focus struggled in a tough DIY market and appointed investment bank NM Rothschild to review the business in January.

Focus has more than 7,000 staff and 256 stores across the UK.

The move to sell the business comes after Focus saw profits slip to £42.7m in the year to October 2006, with sales dropping by about 5% to more than £700m.

The company said today it saw "early signs of improvement" in the DIY market with growing margins and like-for-like sales up 2.8% for the six months to April, against sales declines in the two previous years.

But it added that the uncertainty over the group's position had hampered its store opening programme and limited its ability to invest in the business.

Mr Grimsey, who will take over from Steve Johnson as chief executive when the deal is completed next month, said: "Focus has the potential to be one of the most successful operators in the DIY sector.

"With the resources and commitment of Cerberus, we will have the opportunity to exploit its potential in a fundamentally attractive DIY market."

Focus, which was owned by private equity firms Duke Street Capital and Apax, was originally founded in 1987 by chairman Bill Archer.

It grew through acquisitions, including Do It All in 1998 and Great Mills and Wickes in 2000, before selling Wickes to Travis Perkins in 2005 to focus on consumer DIY.

Source : Guardian.no.uk