Wesfarmers is closing in on Homebase, the British home improvement retailer and garden centre, with a £340 million ($704 million) bid which would eventually see the Australian Bunnings brand across the UK.
Homebase’s owner, Home Retail Group, confirmed overnight that Wesfarmers began talks in September, started due diligence in October and made a “firm offer” in November.
Under the deal, Wesfarmers would acquire the entire Homebase business, including all stores and distribution centres. Product brands owned by Home Retail, such as Habitat, Schrieber and Hygena, are excluded from the sale but licensed for use by Homebase for one year.
Homebase, founded by supermarket chain Sainsbury’s in the 1970s, is the second largest home improvement and garden retailer in the UK with 265 stores and reported annual revenue of £1.461 billion ($A3 billion).
Wesfarmers sees its Australian Bunnings brand working in the UK where it says the home improvement and garden market is attractive and growing.
“The acquisition would be the first step in a program which would invest in the Homebase team and reinvigorate core Homebase assets to build an exciting new Bunnings-branded business over three to five years,” Wesfarmers said in a statement.
“The existing Homebase performance will be enhanced in the short-term through operational improvement.”
Bunnings is a significant contributor to Wesfarmers, Australia’s biggest private employer and the owner of Coles supermarkets. Bunnings sales jumped a stunning 11.6% in the September quarter to $2.5 billion.
The rival Masters business, owned by competitor Woolworths, is reported to be considering ditching its investment in home improvement after about $600 million in accumulated losses.