Strategic Transformation

Kingfisher PLC
15 May 2002




Wednesday 15 May 2002

FOR IMMEDIATE RELEASE

Not for release, distribution or publication in whole or part into or in the 
United States, Canada, Australia, Ireland, Japan or South Africa

             KINGFISHER INITIATES STRATEGIC TRANSFORMATION

Kingfisher plc announces that it has initiated the process of acquiring the
outstanding minority interests in Castorama Dubois Investissements SCA
('Castorama') and that it intends to separate its Electricals business. The
Board believes that creating a unified and integrated international management
structure in Castorama will deliver value for shareholders and provide enhanced
opportunities for employees by unlocking significant unrealised potential in the
business.

In order to secure a unified structure the Board has initiated a cash offer
process that was agreed upon as part of the 1998 merger with Castorama and
specified under Article 21 of its articles of association (statuts). 
Accordingly:

•      Kingfisher proposes making a cash offer of €67 per share, or a total 
       consideration of €5.1 billion (£3.2 billion), for the 45% interest in the 
       fully diluted share capital of Castorama that it does not own.  The Board 
       considers this would be a full and fair offer to the minority shareholders 
       of Castorama, representing a premium of 20% over the Castorama share price 
       before recent speculation


•      In accordance with Article 21 Kingfisher has initiated the process for an 
       independent bank to be appointed to deliver a fairness opinion (certificat 
       d'equite)


•      To finance the proposed offer, and assuming a satisfactory fairness 
       opinion has been received, the Board intends to raise approximately £2.0 
       billion by way of a rights issue that has already been underwritten on a 
       standby basis, with the balance to be provided by additional bank debt 
       facilities 


Upon the launch of the offer, a joint Anglo-French management team led by
Kingfisher Chairman, Francis Mackay, and with Sir Geoff Mulcahy as Chief
Executive, will take on management responsibility for Castorama.  The Board has
also begun the process of seeking a successor to Sir Geoff Mulcahy and expects
to announce the outcome within 6 months.

In addition to this proposed acquisition, the Board believes that it is
appropriate to pursue, as part of this strategic transformation, the separation
of Kingfisher's Electricals business.  The separation will create two focused
leaders in Europe's home improvement and electricals retail sectors.  The Board
believes that this will enhance shareholder value by providing each of the two
businesses with greater strategic focus.  It should also help ensure that the
Electricals business, made more transparent as a separate concern, is fully
valued by the market.  The Board anticipates that the separation will be
undertaken within 12 months, following the completion of the offer for the
minority interests of Castorama.  Jean-Noel Labroue will continue as Chief
Executive of the Electricals business.

Sir Geoff Mulcahy, Kingfisher's Chief Executive, said:

'I have overseen Kingfisher developing strategically through a series of
transforming moves over nearly 20 years. Bringing all of our Home Improvement
businesses under one management roof, and separating our Home Improvement and
Electrical businesses as two companies, will mark a culmination of this process.

'The consolidation now under way in their respective sectors of European
retailing makes this a particularly timely moment to launch the restructuring
announced today. Given the strong market background, I believe that our
shareholders can look forward to benefiting from the continuing growth of two
industry leaders in the years ahead. Laying a solid foundation for this will
give me a great deal of personal satisfaction. '

Kingfisher's Chairman, Francis Mackay, commented:

 'The moves announced today are designed to capture the full potential of our
Group and so enhance value for our shareholders.  Our vision is to create two
outstanding independent businesses in Home Improvement and Electricals, with
strong management teams and market-leading positions.

'Our strategy aims to provide two attractive investments for shareholders
looking for quality businesses in growth sectors of the retail market.  I
believe we have the management strength in depth in both businesses to ensure
their continued success and to open up new opportunities for all employees.  We
are going to pursue this vision firmly and effectively.'

Strategic Rationale for the Offer

Kingfisher's vision is to create an integrated pan-European Home Improvement
business that combines global scale with local marketing skills.  The Board
believes this will create enhanced opportunities for employees, deliver superior
returns on invested capital and create additional value for shareholders.  The
removal of the co-control structure and the creation of a unified group will
allow Kingfisher to further this vision. 

Kingfisher will invest in re-invigorating and modernising the Castorama France 
business, drawing it closer to the operating standards achieved by B&Q and 
closing the performance gap in growth rates and returns between Castorama
France and its domestic competition. Kingfisher also intends to implement a 
range of integration and buying benefits which have already been identified.

Modest performance gains have already been achieved by Castorama France in the
wake of the merger in 1998, but Kingfisher believes that the measures taken to
date have realised only part of the overall potential for improving Castorama's
business in France.  Kingfisher will improve the customer offer by implementing
a store renewal programme and accelerating the adoption of core product ranges.
It also intends to roll-out in Castorama France the Cost Price Reduction
Programme ('CPR') successfully implemented at B&Q, which resulted in benefits of
£48 million last year.  It is expected that the delivery of these various
initiatives will lead to the offer, as envisaged, being modestly enhancing to
earnings per share, after adjusting for the rights issue, in the first full
trading year.

Meanwhile, Kingfisher will continue to invest in the growth of Castorama's other
successful businesses including Brico Depot, Castorama's second principal chain.
Further benefits are expected to arise across all of the Group's Home
Improvement operations as they become more integrated as a truly pan-European
business. 

Kingfisher is confident that as a result of these measures, and of almost a 
decade's experience of working in the French retail sector, it can significantly 
improve Castorama's returns and growth prospects.  Consequently, it will be
able to create enhanced employment opportunities, avoiding any compulsory 
redundancies and preserving Castorama's strong culture. Immediately upon 
confirmation of the offer by the French market authorities, Kingfisher will work 
with Castorama's operating management to ensure a measured and practical 
implementation plan to achieve these benefits, assisted by fully incentivised 
and empowered local teams.


Background to Offer

Kingfisher obtained its 55% economic stake in Castorama in return for merging
its B&Q business into the Castorama group in 1998.  Under the articles created
in this merger, Castorama is co-controlled by a governing board which now
comprises five partners (Commandites) who were in place at the time of the 1998
agreement (the 'Commandites A') and five who were appointed by Kingfisher.

The articles of Castorama also set out a process for Kingfisher to obtain a
casting vote on the governing board by making a cash offer for the minority
interests.  This mechanism was approved by the Castorama shareholders as part of
the 1998 agreement.  In compliance with this, Kingfisher has lodged a formal
notice with the Commandites initiating the process.

Kingfisher has since held extensive discussions with the Commandites A with a
view to agreeing implementation steps for the cash offer process.  To date,
Kingfisher and the Commandites A have not been able to reach any agreement on
this. The Commandites A are seeking legal clarification on the interpretation of
Article 21 and are also requesting the appointment by a French Court of a
mediator (mandataire ad hoc) to assist with its implementation.

Article 21 includes a requirement for an independent bank to provide an opinion
on whether the proposed offer price of €67 per share is fair.  Accordingly,
Kingfisher is continuing to seek the immediate appointment of an independent
bank to prepare this opinion. 

Assuming timely delivery of a satisfactory fairness opinion, the filing of the 
offer with the French market authorities is conditional on approval by 
Kingfisher's shareholders, and clearance by the relevant competition authorities. 
As stipulated in Article 21, acquisition of the casting vote follows upon 
publication of approval of the offer (avis de recevabilite) by the Conseil des 
Marches Financiers ('CMF').

To avoid further delay to the process, however, Kingfisher has concluded that it
is now in the best interests of the businesses and shareholders of both
Kingfisher and Castorama to announce the initiation of the offer process and to
seek the approval of its shareholders.

A circular will be posted shortly to Kingfisher's shareholders convening an
Extraordinary General Meeting to approve the proposed offer and the increase in
Kingfisher's authorised share capital to enable the associated rights issue to
go ahead. 

Equity Funding

Kingfisher intends to raise approximately £2.0 billion through a deeply
discounted rights issue. The size of the rights issue reflects the need to
maintain a strong balance sheet position for the future. The rights issue will
be launched after a satisfactory fairness opinion relating to the offer has been
received from an independent bank.

The rights issue has been fully underwritten on a standby basis by UBS Warburg,
Credit Suisse First Boston and Goldman Sachs International at a subscription
price to be agreed but in any event no less than £1.00 for each new Kingfisher
share to be issued.  This underwriting ensures that Kingfisher has the necessary
equity funding in place to proceed with the offer. 

Kingfisher intends to have the rights issue re-underwritten on terms that 
reflect prevailing market conditions after the receipt of a satisfactory 
fairness opinion.  At that time, it will despatch the formal rights issue 
prospectus to shareholders.

Separation of Electricals Business

The Electricals business of Kingfisher is the second most profitable in the
European electricals retailing sector and, in the Board's view, has significant
future growth potential. The Board firmly believes that, with its experienced
management team in place, the business can achieve this potential as a stand-
alone entity. 

The Board intends to explore all possible options that might help
create additional value for shareholders, including a separate listing for the
Electricals business that might result in a fuller valuation by the market.  It
is anticipated that the separation will be undertaken within 12 months,
following the completion of the offer for the minority interests of Castorama.

Current Trading

Kingfisher will present its first quarter results on 12 June 2002, which is
expected to be before the launch of the rights issue.  During the period, while
results for individual businesses have varied, the Group's overall performance
has been good.  Although economic conditions remain difficult, especially in
Continental Europe, the Board considers that the prospects for the Group as a
whole for the current financial year are satisfactory.

ADDITIONAL INFORMATION

Advisers to Kingfisher

Goldman Sachs International is acting as strategic and financial adviser to
Kingfisher on the group transformation. Goldman Sachs International and BNP
Paribas are acting as principal financial advisers to Kingfisher in relation to
the transaction.  Additional financial advice is being provided by UBS Warburg
and CSFB, in relation to the UK aspects of the transaction, and by Lazard
Freres, in relation to specific French aspects of the transaction. BNP Paribas,
Deutsche Bank AG London and UBS Warburg are acting as mandated lead arrangers
for the proposed debt financing. 

Scrip Dividend

On 20 March 2002, the Board announced a proposed final dividend for the year
ended 2 February 2002 of 7.655p per share and offered a scrip dividend
alternative.  In view of the uncertainty of the timing of the proposed rights
issue, the Board has decided to withdraw the current offer of the scrip dividend
alternative.  Shareholders who have elected to receive the scrip dividend on
this occasion will receive their dividend in cash; mandates electing to receive
future scrip dividends will not be affected.  The final dividend will be paid on
14 June 2002, subject to shareholder approval at the annual general meeting to
be held on 12 June 2002.

Analysts and Press Briefings

An analysts' meeting will be held today at 8.30 am and a press conference will
take place at 11.00 am at Renaissance London Chancery Court Hotel, 252 High
Holborn, London, WC1V 7EN. In Paris, a press and analysts' meeting will be held
at 5.30 pm today at Hotel d'Evreux, 19 place Vendome, 75001 Paris.



IMPORTANT NOTICE

This document does not constitute, or form part of, an offer, or solicitation of
an offer, to purchase or subscribe for any rights, shares or other securities. 
These may only be made on the basis of information that will be contained in the
prospectus to be published in connection with the proposed transaction.

This announcement does not constitute an offer of securities for sale in the
United States.  The information contained herein is not for publication or
distribution to persons in the United States.  The new Kingfisher shares have
not been and will not be registered under the U.S. Securities Act of 1933 (the
'Securities Act') and may not be offered or sold in the United States unless
they are registered with the U.S. Securities and Exchange Commission or they are
exempt from the registration requirements of the Securities Act.  There will be
no public offering of securities in the United States.

Certain statements made in this announcement are forward looking statements. 
Such statements, including those regarding the expected effect on earnings of
the proposed integration programme and our objectives regarding earnings growth,
are based on current expectations and are subject to a number of risks and
uncertainties that could cause actual results and performance to differ
materially from any expected future results or performance, express or implied,
by the forward looking statements.  Factors that might cause forward looking
statements to differ materially from actual results include, among other things,
legal, transactional, regulatory and economic factors, as well as our ability to
implement cost savings and revenue enhancing measures in Castorama.  Other
factors include our ability to successfully add new and planned store space and
to continue to implement cost and cash controls, and to turn around the German
electricals business.  Kingfisher assumes no responsibility to update any of the
forward-looking statements contained herein.

Prices and values of, and income from, shares may go down as well as up and an
investor may not get back the amount invested.  It should be noted that past
performance is no guide to future performance.  Persons needing advice should
consult an independent adviser.

Each of Goldman Sachs International, BNP Paribas, Lazard Freres, UBS Warburg and 
CSFB is acting for Kingfisher and no one else in connection with the transaction 
and will not be responsible to any other person for providing the protections 
afforded to their respective clients or for providing advice in relation to the 
transaction.


                                    - ends -


NOTES TO EDITORS


1.    Castorama is incorporated in France as a Societe en Commandite par Actions ('SCA').  It is
      quoted on the Premier Marche of Euronext Paris with a fully diluted market capitalisation as of
      14 May 2002 of approximately €10.7 billion (£6.7 billion).  Castorama's SCA structure differs
      from the more conventional Societe Anonyme ('SA') structure typically found in France by
      materially restricting the influence of shareholders, as a result of most of the
      decision-making power lying in the hands of the Commandites and management.  Subsidiaries of
      Kingfisher comprise half of the Commandites and Kingfisher holds approximately 55% of the share
      capital of Castorama


2.    The process which the Board has initiated is set out in Article 21 of the articles of
      association of Castorama.  Broadly, this allows Kingfisher to take full control of Castorama
      through one of its subsidiaries, SOCODI SARL, acquiring a casting vote at meetings of the
      Commandites from the time the French securities regulators approve a cash offer for Castorama
      at a price which an independent bank has approved as fair.  The Article provides for an
      independent bank to be appointed within two weeks of the start of the process (which actually
      began on 18 April) and for the bank to give its certificate of fairness within a further one
      month.


3.    The closing share price of Castorama on 8 March 2002, the day prior to the start of recent
      speculation on 9 March 2002, was €55.7. The statement relating to the impact of the transaction
      on Kingfisher's earnings per share is based on the closing Kingfisher share price on 14 May
      2002 of £3.85.


4.    Kingfisher is Europe's leading Home Improvement retailer and is ranked number three in the
      world.  The Company (through Castorama) operates more than 570 Home Improvement stores in 12
      countries and enjoys strong market positions in France, the UK, Poland and Taiwan.  Sales for
      the sector for the year ending 2 February 2002 were over £5.8 billion, with retail profit of
      over £430 million.


5.    Paris-based Kingfisher Electricals operates more than 800 stores in nine countries.  It is
      Europe's second most profitable electrical retailing business, with more sales of white goods
      than any of its competition. Its sales for the year ending 2 February 2002 were nearly £3.8
      billion with retail profit of over £180 million.  As well as holding the leading position in
      France with Darty and the number two position in the UK through Comet, Kingfisher is also the
      market leader in Belgium through Vanden Borre.  Furniture and Electrical chain BUT strengthens
      Kingfisher Electricals in France.


6.    Kingfisher's Annual Report for the year ending 2 February 2002 was posted to shareholders
      yesterday.



7.    Kingfisher's first quarter results will be announced on 12 June 2002, the same day as the AGM.




Further Enquiries:
Broker and Institutional Enquiries
Ian Harding, Director of Investor Relations               [phone]

Media Enquiries:
Andrew Mills, Director of Corporate Affairs              [phone]

Jonathan Miller, Head of Corporate Comms, UK             [phone]

France

Graham Fairbank, Head of Corporate Comms                 [phone]

Kingfisher plc                                           [phone]
Kingfisher Website                                       www.kingfisher.com


The Maitland Consultancy

Angus Maitland                                            [phone]
Duncan Campbell-Smith        

Euro RCSG C&O
Laurent Wormser                                          [phone]
Marie-Noelle Brouaux                                     [phone]

Goldman Sachs International

Yoel Zaoui                                               [phone]
Robin Bishop


BNP Paribas
Thierry Varene                                           [phone]





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