A deal that could lead to the French company Rexel dominating electrical distribution in the UK was thrown into confusion by a court decision before Christmas.

In November, Rexel, which owns Denmans in the UK, made a €3.1bn offer for the Dutch group Hagemeyer, which owns Newey & Eyre and WF (formerly Wholesale Fittings). But on December 12, a Dutch court ordered Hagemeyer to pay €50m as an advance payment for damages arising out of the bankruptcy in 2000 of Ceteco, in which it had a 65% stake.

The court ruled that Hagemeyer had failed to take action to avert Ceteco’s bankruptcy. Some observers suggest that the final payout could be as high as €250m. Hagemeyer said it plans to appeal against the judgement and that Rexel was aware of the lawsuit when it made its offer.

However, Rexel said it was reviewing the court judgement, and was expected to lower its offer for Hagemeyer, whose share price fell substantially following the judgement.

Hagemeyer is the UK market-leader in electrical distribution, with around 291 branches and a 2006 turnover of more than €1.1bn. The UK is Hagemeyer’s largest business in Europe, where it operates more than 600 branches.

Europe represents 44% of Rexel’s sales (through 896 branches). Its biggest market is in the Americas, which accounts for half of its business, through 720 branches.