France's top furniture retailer is in advanced discussions to be acquired by U.S. private equity firm Clayton, Dubilier & Rice (CD&R), in a partnership led by a unit of XXXLutz Group, Europe's third largest furniture retailer.

The French retailer BUT has a network of 303 company and franchisee-owned store selling furniture, appliances and decorative accessories. In 2015, BUT generated net revenue of €1.3 billion. The deal would be a 50:50 partnership with WM Holding, a company related to the XXXLutz Group, one of Europe's three largest furniture retailers.

If the deal closes as expected in the second half of 2016, Sir Terry Leahy, senior advisor to CD&R funds and former CEO of Tesco, would likely be chairman. Coming as it does following the BREXIT vote, the deal holds significant implications for CD&R's European investment patterns. CD&R financed the divestment of laminate panel manufacturer Wilsonart from Illinois Tool Works Inc.

"Our proposed investment in BUT is consistent with our European investment strategy," said CD&R Partner David Novak, noting that more than half of the investments completed by CD&R since 2009 have been "partnership" transactions in which a corporate or strategic partner selects CD&R to invest.

M&A advice was provided by Bank of America Merrill Lynch, BNP Paribas, Lazard and M&M Capital Ltd, legal advice by Clifford Chance and Debevoise & Plimpton LLP, and due diligence support by Ernst & Young and Roland Berger.

Founded in 1972, BUT has grown to become the home equipment retailer with the largest store network in France, with more than 6,000 employees and 303. XXXLutz is one of the three largest furniture retailers in Europe and employs over 20,000.

(Source: woodworkingnetwork.com  Author: Bill Esler)