UK DIY chain Homebase has been sold by its owner Home Retail Group to Australian retail giant Wesfarmers for £340m. Wesfarmers already owns Bunnings – one of Australia’s largest suppliers of outdoor living and DIY products and as part of the takeover, the 265 UK Homebase sites will be rebranded under the Bunnings banner over the next three to five years in a move that would see itspend a further £500m on upgrading the UK stores.
Wesfarmers managing director Richard Goyder said the acquisition of Homebase would complement the strong growth trajectory of the Australian and New Zealand business.
“The £38bn UK home improvement and garden market is a large and growing market with strong fundamentals,” said Goyder. “The opportunity to enter this attractive market through the acquisition of Homebase has been comprehensively researched and carefully considered by Wesfarmers and Bunnings. The Bunnings team has done a lot of work to make sure it understands the market and the opportunity, including having visited hundreds of stores, spending significant time researching the market and closely studying international retail expansions into the UK and other markets. Detailed due diligence has been completed and implementation and improvement planning is well advanced.”
The deal follows a conditional offer put forward by the Australian retail group that was announced on January 14 and although the acquisition is subject to approval by Home Retail Group shareholders the board of Home Retail Group is said to have unanimously recommended the transaction to shareholders. Completion of the deal is expected by the end of the first quarter of 2016.
The Bunnings Austrailian home improvement and outdoor living retailer has reported revenue of some A$9.5bn (approx £4.6bn) and its parent Wesfarmers, which owns one of Australia’s biggest supermarket chains, Coles, has estimated that the UK’s home improvement and garden market is worth £38bn, with the market leader being Kingfisher’s B&Q chain.
Home Retail Group, which owns the Argos retail chain as well as Homebase, had been put in the spotlight after it emerged that it had rejected a takeover bid from supermarket chain Sainsbury’s last year. However, Sainsbury’s had made clear that it was only interested in Argos and it had been expected to sell Homebase if a deal was agreed.
Bunnings managing director John Gillam said the acquisition represented a “compelling opportunity to enter the attractive UK home improvement and garden market”.
“Homebase has an established and scalable store platform with strong representation in high density areas,”