Woolworths will gain about $1.5 billion from exiting its home improvement division, including selling the property of the troubled Masters chain.
The company says it will work hard to find Masters employees jobs within the group or will pay full redundancy. There are 7,700 staff in the home improvement businesses
The retailers says Masters will cease trading by December 11.
A consortium of Aurrum Group, Spotlight Group and Chemist Warehouse will buy the Masters properties, including 40 freehold trading sites, 21 freehold development sites and 21 leasehold sites.
Home Consortium plans to repurpose the former Masters sites into multi‐tenant large format centres
What’s on the shelves at Masters will be sold, bringing in about $500 million.
The Masters business has been losing about $200 million a year, unlike main competitor Bunnings which is a major contributor to profits at its owner Wesfarmers.
In February, Woolworths posted a loss of $972.7 million for the first half of the financial year, its first for more than 20 years, driven by a massive $1.9 billion write down in the value of the Masters business.
Woolworths shares went into a trading halt today ahead of an announcement about the process to dispose of its troubled hardware business.
The retailer then announced the sale of Home Timber & Hardware Group to Metcash for $165 million.
A third of the Masters business is held by Lowe’s, a US retailer. Woolworths will need to buy Lowe’s share, at a price to be determined, before disposing of what’s left of Masters.
After estimated wind‐down costs, Woolworths expects to get $500 million following Lowe’s consent to the Home Consortium transaction.
“When I was appointed CEO in February, I said exiting the Home Improvement business was a top priority,” says Woolworths CEO Brad Banducci.
“Today’s announcement delivers on that commitment. These agreements are the result of an intensive seven month process of reviewing all possible options for exit and extensive negotiations. This decision means management can focus on driving the momentum in our core businesses.
“Since the sale process began, our 7,700 staff in the Home Improvement businesses have worked extremely hard in an uncertain environment and we sincerely thank them for their commitment.”
The company is due to announce full year results tomorrow.