LONDON (ShareCast) - (Sharecast News) - Discount retail chain B&M is to buy "up to" 51 stores from collapsed rival Wilko, which fell into administration last month.
In a press release, B&M European Value Retail confirmed it had entered into an agreement with Wilko's administrators to buy the shops for a maximum of £13m.

"The consideration is fully funded from existing cash reserves and the acquisition is not expected to be conditional on any regulatory clearances," B&M said.

B&M, which has over 700 stores and nearly 33,000 employees in the UK under the B&M brand, did not disclose which Wilko stores it had purchased, but analyst Orwa Mohamad at research agency Third Bridge, reckons the company will have "cherry picked Wilko's best stores - i.e. the ones that are most profitable".

"B&M's general focus on out-of-town locations means it can incorporate many of Wilko's high street stores and locations with limited cannibalisation impact," Mohamad said.

"From an assortment perspective, there's a high degree of crossover between Wilko & B&M in households, garden, toys, accessories. Quite often, Wilko & B&M sell the same product, meaning consumers have a strong incentive to continue frequenting those stores regardless of the banner."

It is thought that some 350 Wilko stores are still at risk of closure, after the retailer appointed administrators in August following a financial collapse.

B&M's parent group also runs a further 311 convenience stores under the Heron Foods brand in the UK, as well as 107 B&M stores in France.

The stock was down 3.4% at 548p by 1030 on Tuesday, driven down after JP Morgan analysts hit the stock with a double-downgrade from 'overweight' to 'underweight', owing to deflationary risks for food retailers across Europe.

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