Australian group Wesfarmers plans to turn Homebase stores into its own Australian brand Bunnings, following its £340m acquisition of the DIY chain.
This deal marks Wesfarmers’ first acquisition outside Australia and New Zealand.
Wesfarmers, one of Australia’s largest listed companies, is headquartered in Perth, Western Australia. It has a current stock market value of A$44bn (£21bn).
It was founded in 1914 as Western Australia’s farmers’ cooperative and today owns department stores; Australia’s second-largest supermarket chain, Coles; coal mines and chemical plants; a stake in a boutique investment bank; and hardware chain Bunnings.
In a statement on Thursday, Wesfarmers revealed that it planned to use its investment in Homebase to reinvigorate core Homebase assets to build a new Bunnings-branded business over the next five years.
The UK DIY sector is in the doldrums, with Homebase and B&Q being hit hardest and responding with aggressive store closures.
Homebase announced plans last year to close 80 stores in three years, which is around a quarter of its total portfolio. B&Q announced in March last year that it would close 60 stores.
The deal between Wesfarmers and Homebase will see it take ownership of Homebase’s 265-strong portfolio.
Managing director Richard Goyder said: “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.”
The group also said that the acquisition of Homebase delivered an established and scalable platform with stores that are the right size for the UK market, supporting both warehouse merchandising and a low-cost operating model.
Wesfarmers’ move is also expected to pave the way for Sainsbury’s to make a formal offer for parent company Home Retail Group.
The UK grocer made a bid for the Homebase and Argos at the end of last year that was rejected. It now has until 2 February to make a formal offer for the group.
The deal between Wesfarmers and Homebase is expected to exchange in March.
Click here to see details of Wesfarmer’s rationale for its Homebase acquisition.
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