Wesfarmers has agreed to buy home improvement and garden retailer Homebase from the Home Retail Group for $705 million, after it made a takeover bid last week.
The UK based retailer currently has 265 stores and will provide long-term value add for Bunnings, says Wesfarmers managing director Richard Goyder.
“Bunnings is well placed to unlock value from the Homebase business and has a proven track record in delivering growth both organically and through acquisition,” he explains. “Our offer provides significant execution certainty and an attractive cash consideration to Home Retail Group shareholders.
“The £38 billion UK home improvement and garden market is a large and growing market with strong fundamentals. 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.”
A new management structure will be put in place following the acquisition, with John Gillam as the new CEO, who says the takeover provides a great opportunity to enter the UK home improvement and garden market.
“Homebase has an established and scalable store platform with strong representation in high density areas,” he says. “The stores are well-sized for the UK market and support warehouse merchandising and a low cost operating model.
“The acquisition is the first step in building a further growth platform for Bunnings with additional planned investment of approximately £500 million (A$1,037 million) in the Homebase team and assets to build a new Bunnings-branded business over three to five years. We will combine essential local elements with the best of Bunnings to bring customers in the UK and Ireland an exciting new home improvement and garden offer.”
The acquisition is expected to be completed by the end of March this year.
By Marion Gerritsen
