Wesfarmers Limited has entered into an agreement to acquire Homebase from Home Retail Group for £340m (€446m). Homebase is the second largest home improvement and garden retailer in the UK and Ireland. Homebase currently has 265 stores and reported revenue of £1,461.2m (€1,917.3m) for the 12 months ended 29 August 2015.
Wesfarmers already owns Bunnings, one of Australia's largest suppliers of outdoor living and DIY products located in both Australia and New Zealand.
Managing Director of Wesfarmers, Richard Goyder said the acquisition of Homebase provides a long-term value creation opportunity for Bunnings which will complement the strong growth trajectory of the Australian and New Zealand business.
“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,” Mr Goyder said. “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.”
It was confirmed earlier this year that Sainsbury’s approached Home Retail Group regarding a possible cash and share offer for the Company. After the board reviewed the approach with its advisers, they rejected it as it undervalued Home Retail Group and its long-term prospects.
The acquisition is subject to approval by Home Retail Group shareholders under the UK Financial Conduct Authority’s Listing Rules for Class 1 transactions. The Board of Home Retail Group has unanimously recommended the transaction to shareholders. Subject to the approval of Home Retail Group shareholders and its banking syndicate, transaction completion is expected by the end of the first quarter of calendar year 2016.
