Essential reading for retailers and suppliers in the home improvement market

Bunnings parent makes £340m bid for Homebase

Published: 14 January 2016
Australian conglomerate Wesfarmers Limited (Wesfarmers), which owns the Bunnings chain, confirms it has made a conditional offer to acquire Homebase from Home Retail Group plc for £340m (around AUS $699m).
Bunnings parent makes £340m bid for Homebase
According to a statement released today, it emerged that Wesfarmers and Home Retail Group began discussions in September 2015 and due diligence work commenced under a confidentiality agreement in October. An exclusivity agreement was signed in early December and confirmatory due diligence has now been completed. Transaction documentation is advanced and in the process of being finalised.

However, Wesfarmers stressed there is no certainty the offer will lead to an agreed transaction and the transaction is still subject to approval by shareholders of Home Retail Group - itself the subject of a takeover bid by Sainsbury's.

Headquartered in Western Australia, Wesfarmers is a diversified conglomerate with business operations covering supermarkets, hotels, department stores and home improvement, including leading Australian and New Zealand chain Bunnings, which has a turnover of AUS $9.5bn.

If Wesfarmer's bid is successful, the Australian firm plans to transform the chain into a new Bunnings-branded business in the UK over the next three to five years.

It said of the strategic rationale behind its decision to acquire Homebase that the UK home improvement and garden market is an attractive and growing market, with Homebase offering an established and scalable platform with stores that are the right size for the UK market and support warehouse merchandising and a low cost operating model.

It added that "the existing Homebase performance will be enhanced in the short-term through operational improvement", with the acquisition proving the first step in a program which would see Wesfarmers invest in the Homebase team and "reinvigorate core Homebase assets" to build the new UK-based Bunnings-branded business.

Homebase is the second largest home improvement and garden retailer in the UK and Ireland, with 265 stores and reported revenue of £1,461.2 million for the 12 months ended August 29, 2015. It is unknown what the deal would mean for the 17,000 people employed by Homebase.

Initial reaction to news of the offer has been mixed, with some suggesting that the success of home improvement and outdoor living retailer Bunnings in Australia, wouldn't necessarily translate into a competitive advantage in the UK.
Home improvement and outdoor living retailer Bunnings reported a revenue of AUS $9.5bn and earnings before interest and tax (EBIT) of A$1.1 billion in the year to June 30, 2015. Over the past 20 years, it has achieved compound sales growth of 16.1% per annum and compound EBIT growth of 20.3% per annum. It operates 338 stores in a variety of formats in Australia and New Zealand and employs 40,000 peeople.

Comments

14 January 2016 00:05:00
By Mike hunt
Great that were no longer under the wings of them that have run us to the ground but jeeezzz bunnings will you decide on what you want and how you want things doing

One week it's orange point of sale the next it's white no wait it's back to orange, do you have any idea on the cost of ink, paper and more so time which can be put to better use and furthermore why don't you get someone in charge and tell us exactly what you want doing, one week it's stock next to displays the next it's not, again manpower to lug heavy things around time and time again, so far 8 times bbqs have been moved and wait it will be more, things like this pisses staff off.

SORT IT OUT ONCE AND LEAVE IT AT THAT
14 January 2016 00:04:00
By Whisper
John W , all comments on here are personal , thats what it is here for to allow people to air their views , not sure what is "distasteful" , HB was once a trusted Brand for quality but PL had no idea how to run a retail business and just went defensive chasing margin by putting prices up and quality down. Too much for Echo and crew to change in short time.
Mr Happy is right , the only distasteful thing is the pay off PL got and the bundle JW will make.
It is a shame for those long serving employees but at least Bunnings will invest so that people can look forward to a career .
14 January 2016 00:03:00
By mr happy
Couldnt agree more with you whisper, paul loft and chums have run homebase to the ground with no real business plan apart from wasting company profits on pie in the sky ideas (liberation what a joke!!!) The pitfall to all this is knowing that they will walk away with a nice little goldpot and pension. Good riddance to the hrg
14 January 2016 00:02:00
By John W Herbert
The first comment "by whisper" reflects all that is bad with social media. His peronal commments are distasteful and unfair.
14 January 2016 00:01:00
By whisper
Brilliant news, bit the death of a once trusted brand for stock and quality , tranished by poor Paul Loft leadership , no stock of basic lines and too expensive .

Bunnings will bring life and investment

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