Tue, 19 Jan 2016 | BUSINESS SALE
Australian company Wesfarmers has agreed the purchase of the UK's Homebase company from its current owner, Home Retail.
Home Retail is due to return £200 million to investors following the sale after Wesfarmers offered to buy the company's 265 Homebase DIY stores for £340 million. It is thought that Wesfarmers will work with the company's assets but is likely to scrap the Homebase brand itself.
A major factor in Home Retail's decision to sell is the interest recently shown in the wider brand by J Sainsbury. J Sainsbury made a £1 billion bid approach, but had this rejected by Home Retail; now that Homebase has been offloaded, J Sainsbury is expected to show renewed interest in its former owner.
Bernstein analyst Jamie Merriman commented: “Given Sainsbury’s interest in Home Retail is centred on the Argos asset, the sale of Homebase to Wesfarmers paves the path to a simpler transaction.”
For Wesfarmers, the purchase provides the company with the assets needed to bring its own Bunnings Warehouse brand to the UK in the next three to five years. It is due to invest £500 million in the overhaul of the existing stores and properties, as well as the opening of several new sites.
The sale will also mean upheaval for other operators within the market, including B&Q, when Bunnings brings its low prices into the UK, forcing others to reassess their position.
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