Homebase to be purchased by Wesfarmers

Thu, 14 Jan 2016 | DIVISION SALE

Home Retail Group is nearing a sale of its DIY chain to Wesfarmers, an Australian retailer, in a deal worth £340 million.

Discussions towards the deal began in September, with a definite offer being made in November. Wesfarmers has completed its due diligence, with talks still continuing to sort out the details.

Wesfarmers owns Burnings, Australia's largest home improvement retailer, and the Coles supermarket chain. It is a “substantial and strong group with an ambitious plan” to develop Homebase, Home Retail Group said, adding that the £340 million offer represented good value for the shareholders.

The deal would see Wesfarmers purchase Homebase in its entirety, to include all stores and distribution centres. Habitat and other product brands would not be included in the sale, but would be licensed for use by Homebase for a year.

Sainsbury's confirmed that Home Retail Group had rejected its own bid to buy Argos earlier this month, and reaffirmed its interest in the chain this week. Wesfarmer's move on Home Retail Group could clear a path for Sainsbury's to take Argos over, which would help the supermarket to be a stronger competitor to the likes of Amazon.

It has a deadline of 2 February to make a formal offer for Home Retail. The takeover idea has caused some disquiet amongst shareholders who question the benefit of a deal considering the space-related challenges that face both companies.

Sainsbury's has resolved that it could shut down between 150 and 200 Argos stores and relocate them to nearby Sainsbury's stores with excess space.

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