MFI offloads stores for £1

22-09-2006

Furniture group MFI has sold its 200 store retail division to Merchant Equity Partners (MEP) for the nominal sum of £1.

MFI has operated its retail stores at a significant loss during the last year, and under the terms of today's deal will pay up to £74 million over the next two years for the division to change hands.

However, MFI's pledge is reliant on the private equity group investing the same amount in the stores during the same period.

The company will pay MEP £8.7 million once the deal has gone through - which after shareholder approval is expected to be completed next month - £53.1 million next September and £12 million in April 2008.

At next month's extraordinary general meeting MFI's board also intends to change the company's name to Galiform, with the firm looking to focus on its profitable Howden Joinery and supply operations.

MFI today said it wanted to have more than 500 Howden depots operational within 12 months time.

Matthew Ingle, chief executive of the firm, said: "Over a number of months the board of MFI has considered various options for the retail business and has concluded that the disposal of retail on the terms agreed is in the best interests of shareholders.

"We believe that a restructuring of retail within the group would have considerable operational and financial risks," he added.

The chief executive concluded: "The new owners have agreed to invest significant sums in retail and their senior management team are highly experienced retailers. We wish them well in making a success of retail."


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