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Home Depot eyes U.K.'s Kingfisher

Shares in British home improvement retailer Kingfisher Plc rose on Monday after a press report rekindled talk that U.S. firm Home Depot is considering a takeover, though analysts remained skeptical.
/ Source: Reuters

Shares in British home improvement retailer Kingfisher Plc rose on Monday after a press report rekindled talk that U.S. firm Home Depot is considering a takeover, though analysts remained skeptical.

"In the long term, if Home Depot want to move to Europe then Kingfisher would be an attractive proposition, but the returns are much higher in the U.S," said Tony Shiret, retail analyst at CSFB.

Kingfisher, Europe's biggest home improvement firm, and Home Depot, the world's largest, both declined to comment on Sunday after the Observer newspaper said Home Depot was considering an eight-billion-pound ($14.3 billion) bid, citing Wall Street investment bankers.

By midday, Kingfisher shares had cooled, trading 7 pence, or 2.5 percent, higher at 288-1/2, having been up more than five percent earlier. They were still the biggest FTSE 100 gainer and volume was relatively strong.

Speculation about a takeover of Kingfisher has intensified since it demerged its electrical product arm Kesa in July. Home Depot has long been considered a likely predator.

But analysts said the timing was not yet right and doubted the shares would hold their gain.

"I would say that anything attributed to U.S. investment bankers should be treated with a huge degree of scepticism," Shiret said. "I don't think it's going to happen."

"Why should it happen now? Why not when the dollar was much stronger?"

Shiret said he also thought it unlikely Home Depot would swoop while Kingfisher was still in the early stages of a massive integration of its French acquisition, Castorama.