The Sunday Times reported that Focus Wickes, the DIY retailer owned by private equity firms Duke Street Capital and Apax Partners, has appointed Goldman Sachs to explore possible sale options.
The newspaper said it is unclear how much the business would fetch in any sale, but added that analysts had estimated it could be worth more than £1.5 billion (€2.1 billion; $2.8 billion).
Among the exit options being considered are a sale to another private equity firm or a rival operator. Two other possibilities include a recapitalisation, which would allow shareholders a partial exit, or the sale of just the Wickes brand leaving the owners in control of the Focus stores.
The report said it was understood that a flotation of Focus Wickes has been ruled out because of the uncertain state of the stock market. Goldman Sachs and ING had advised Duke Street on a planned IPO of the business in the summer of 2002, but it was pulled due to difficult market conditions at the time.
Duke Street made its original investment in Focus Group in 1987, when it had six stores. In August 1998 it then provided financial backing to acquire the loss making Do It All chain from The Boots Company for £68 million, trebling the size of the business to 210 stores. In December 2000 Focus successfully acquired the Great Mills DIY retail chain from RMC for £285m to become the second largest DIY retailer in the UK. The business currently has 420 UK stores.
In November 2002, Duke Street sold a 29 percent stake in the business to Apax Partners for £120 million. Duke Street was reported to have made a return of more than five times capital invested on the deal, which saw it retain a stake of almost 42 percent. At the time, the business was valued at just less than £1.2 billion.
Sources close to Focus Wickes said it was unlikely that a sale would be announced before the end of the year.