Leahy joins B&M as chairman

NY buyout house takes 60 per cent stake from Arora family

Sir Terry Leahy is taking his first senior job in retail since standing down as Tesco chief executive last year, joining the board of British discount chain B&M as chairman following a private equity buyout.

Clayton Dubilier & Rice, the New York-based private equity house which counts Sir Terry as a senior adviser, has agreed to buy 60 per cent of B&M from the Arora family in a deal that gives the company an enterprise value of around £965m, according to people with knowledge of the deal.

Sir Terry stood down as chief executive of Tesco in March last year, following 14 years at the helm of Britain’s biggest supermarket by sales. He declined to comment on Monday.

Vindi Banga, the former president of foods, home and personal care at Unilever will also join the board of B&M, CD&R said in a statement.

“B&M is a fantastic retail format in the growing discount sector,” said David Novak, a partner at CD&R in London. “We are pleased to have the opportunity to partner with the management team to accelerate the growth of the business by widening its market presence outside of the UK.”

B&M opened its first store in Blackpool, Lancashire in 1976, and now operates more than 300 stores in the north of England, Scotland, Northern Ireland and Wales. It employs over 10,000 people and had a turnover £713m in 2011.

The Arora brothers, who bought the retailer in 2005, were among the early wave of western entrepreneurs to travel to China in search of cheap goods to sell back in the UK. Their Orient trading business, founded in 1997, designed, imported and distributed soft furnishings, household items and gifts for big retailers. In 2000 it was sold to Lambert Howarth, the footwear and homeware supplier, netting them £35m.

In 2005, B&M had only 21 stores but the Aroras expanded quickly, taking advantage of the collapse of other retailers such as Woolworths to rent shops in UK high streets. In 2010 they moved the company’s base to Liverpool to benefit from its port links and a new warehouse to make distribution more efficient.

One person involved in the transaction said: “They are talented retailers – that is the long and short of it. They know what sells. They are in geographic areas where a lot of people don’t think they can make money.”

CD&R was advised by Bank of America Merrill Lynch, Clifford Chance, Debevoise & Plimpton, Ernst & Young and Bain & Co. B&M was advised by Rothschild, Allen & Overy, PwC and OC&C.

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