Wesfarmers plans assault on UK DIY market with Homebase rebrand

The Australian retailer has made a conditional cash offer for DIY retailer Homebase of £340m with a deal close to being finalised, owner Home Retail disclosed yesterday.

Wesfarmers said today it would invest in Homebase to create a Bunnings-branded business “over three to five years”.

Bunnings is Australia’s largest hardware chain, with a total of 338 stores, including a presence in New Zealand. In its last financial year it posted sales of Aus$9.5bn (£4.6bn) and EBIT of Aus$1.1bn.

The move will see Wesfarmers take on the likes of B&Q and Wickes in the UK’s DIY retail market.

The Australian group said it views the UK’s home improvement and garden market as “attractive and growing”. It added that it regards Homebase stores as “the right size for the UK market” with a “low-cost operating model”.

Home Retail reported today that like-for-likes at Homebase rose 5% but total sales slipped 4% as it is carrying out an “aggressive” store closure programme.

Wesfarmers said it will boost Homebase’s short-term performance through “operational improvement”, without giving more detail.

It added: “The acquisition would be the first step in a programme which would invest in the Homebase team and reinvigorate core Homebase assets to build an exciting new Bunnings-branded business over three to five years”. 

Meanwhile Sainsbury’s is seeking to acquire the rest of the Home Retail Group, including Argos, and is expected to return with an improved offer after having an initial approach rejected in November.