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* Agrees 15 euros a share offer with Mr Bricolage's biggestinvestors
* Proposes subsequent mandatory offer to buy out minorityholders
* Enterprise value of deal is 275 million euros
* Kingfisher shares up 2.6 pct, Mr Bricolage sharessuspended (Adds detail, Kingfisher, Mr Bricolage CEO, analyst comments,shares)
By James Davey and Dominique Vidalon
LONDON, April 3 (Reuters) - Kingfisher, Europe's No.1 home improvement retailer, moved to strengthen its position inFrance, its most profitable market, with a 275 million euros($379 million) takeover bid for smaller rival Mr Bricolage.
The owner of B&Q, the market leader in Britain, alreadytrades as Castorama and Brico Depot in France where it isjostling for the top spot with Group Adeo, which owns the LeroyMerlin chain.
Mr Bricolage's Chief Executive Jean-Francois Boucher toldreporters on Thursday that based on 2012 data his firm had an11.3 percent market share, Kingfisher around 34 percent andGroup Adeo about 35 percent.
Kingfisher, whose own estimate of its market share is muchlower, said it had entered exclusive negotiations with MrBricolage's two main investors to buy their shareholdings for 15euros a share.
A deal would allow the UK firm to take out a rival, addbuying scale and provide a platform for an internationalfranchise model. Mr Bricolage owns 81 stores and has 435franchised stores, including some overseas.
Any deal is also likely to raise competition concerns butboth Kingfisher and Mr Bricolage expect French authorities tofollow a recent pattern of looking at concentration issues on alocal market basis rather than looking at the national market.
Castorama and Brico Depot stores tend to be large and out oftown while Mr Bricolage outlets tend to be smaller and in urbanareas, a Kingfisher spokesman noted.
"This would add a third, complementary strong businessalongside Kingfisher's existing two successful brands inFrance," said Chief Executive Ian Cheshire.
The firm would also argue that only Mr Bricolage's directlyowned stores should be considered in market share calculations.
Nevertheless, Kingfisher expects the acquisition process totake until the end of its 2014-2015 financial year.
Jean-Claude Bourrelier, chairman of Bricorama, which has a3.5 percent share of the French DIY market, described the dealas "bad news" and said it would hurt competition.
STRATEGIC MERIT
Kingfisher, which trades from 1,124 stores in nine countriesin Europe and Asia, makes about 50 percent of its annual profitin France. Its shares rose 2.6 percent to 443 pence at 1124 GMT,valuing the business at 10.5 billion pounds.
Trading in Mr Bricolage was halted on the Paris bourse andwill resume on Friday. Its market value is 136 million euros.
Analysts said there was clear strategic merit in buying thefirm, which made a pretax profit of 17.2 million euros in 2013,on revenue of 552.1 million euros.
Mr Bricolage's 69 franchised stores in 10 other countrieswould also provide Kingfisher with a useful entry point into newmarkets, including Belgium and Bulgaria.
Analysts at Deutsche Bank reckon the deal should enhanceKingfisher's earnings by about 2 percent in its 2015-16 year.
"This is good news, coming on the back of a couple of monthsof improving do-it-yourself data in what remains a challengingFrench market," they said.
Kingfisher, which last week posted a 4 percent rise inannual profit, proposed to acquire 41.9 percent of MrBricolage's equity from the Association Nationale des Promoteursde Faites Le Vous-Mene (ANPF), a group of franchisees, and 26.2percent from the Tabur family.
It would then make a mandatory offer to buy shares held byminority shareholders at the same 15 euros a share price.
At this level, including net debt of 120 million euros, theenterprise value of the deal would be 275 million euros.
The plan, which is currently a non-binding agreement,includes keeping Mr Bricolage's existing franchisee andaffiliate network.
The two companies will meet with their respective workscouncils in France and improved commercial terms will beproposed to the franchisees. Depending on the outcome, a bindingagreement would be entered into.
($1= 0.7263 Euros) (Editing by Elaine Hardcastle)
