Home Retail Group, recently wooed by an offer to buy Argos from Sainsbury’s, is selling Homebase to Bunnings, Australia’s largest hardware retailer. The business is owned by Wesfarmers, one of Australia’s largest listed companies.
All 265 Homebase stores will be acquired, making the DIY chain the second largest home improvement and garden retailer in UK and Ireland, a rival to B&Q. The acquisition will also be Wesfarmers’ debut into the UK’s retail industry as well as its first expansion offshore. The UK home improvement market is considerably larger than Australia’s, at 1.6 times the size, and a household count three times the size. Wesfarmers plans to invest £500m to refresh and rebrand the entire estate in a three to five year plan that will see several pilot stores open in the UK. It is expected that the acquisition will have an inconsequential effect on earnings per share and return on equity for three years, after which it is predicts to contribute positively.
Homebase’s sale is expected to complete at the end of March, freeing up time for Sainsbury’s to finalise their deal for Argos.