High Street giant Kingfisher is poised for success in its battle to take over Europe's biggest DIY retail chain, after bankers backed its �3.2bn bid.

Kingfisher set its sights on entering other European DIY markets after its bid for French giant Castorama was deemed as fair by Rothschild investment bank.

Rothschild was brought in to assess Kingfisher's bid after shareholders in Castorama, owner of B&Q in Britain and Brico Depot in France, said the offer was pitched too low.

"We are obviously pleased that Rothschild has confirmed that our offer is fair and we will be proceeding as planned," Kingfisher chairman Francis Mackay said.

Rotschild's favourable assessment of Kingfisher's bid draws a line under an acrimonious dispute between the two retail groups.

'Strategic transformation'

Kingfisher, which already owns a 45% stake in Castorama, said it would help pay for the deal by raising �2bn through an issue of extra shares.

Shareholders would be buying into a firm undertaking a "strategic transformation", including a spin-off of Kingfishers' electricals division, which includes the UK retailer Comet.

Mr Mackay said he was "looking forward" to working with Castorama staff "to realise the undoubted potential in the brands across the world".

Kingfisher chief executive Sir Geoff Mulcahy said: "We look forward to furthering our vision of a pan-European home improvement business with a unified management structure."

Fair value?

Kingfisher announced plans to acquire the 45% of Castorama that it does not already own in May as part of a wider plan to consolidate its faster-growing DIY operations.

But the deal ran into opposition from Castorama's remaining shareholders, who argued that Kingfisher's 67 euro per share bid undervalued the company.

Castorama's chief executive Jean-Hugues Loyez resigned from the Kingfisher board in protest over the proposed takeover.

Rothschild was brought in to weigh up the bid last month after Castorama said the original arbiter, Salomon Smith Barney, had too close a relationship with Kingfisher.

Some Castorama executives were reported to have had reservations about being brought under the direct control of Kingfisher's management.

Castorama, with about 549 stores, is Europe's largest DIY chain.

Kingfisher shares stood 1p higher at 311p in lunchtime trade on Monday.