Wesfarmers sells Homebase for nominal sum
Under the terms of the agreement, Hilco will acquire all Homebase assets, including the brand, its store network, freehold property, property leases and inventory. In addition, the 24 stores that converted to Bunnings pilot stores will revert to the Homebase brand.
Following the sale, Wesfarmers will participate in a value share mechanism whereby it will be entitled to 20% of any equity distributions from the business.
The sale follows a review of the Bunnings UK and Ireland business which considered a range of options to improve shareholder returns.
Operating around 250 stores across the UK, Homebase was acquired by Wesfarmers in 2016 for £340 million. However, today Wesfarmers said the investment had been disappointing, with problems arising from poor execution post-acquisition being compounded by a deterioration in the UK retail sector.
Commenting on the sale, Wesfarmers managing director Rob Scott said: “A divestment under the agreed terms is in the best interests of Wesfarmers’ shareholders and will support the ongoing reset and repositioning of the Homebase business.
“While the review confirmed the business is capable of returning to profitability over time, further capital investment is necessary to support the turnaround. The materiality of the opportunity and risks associated with turnaround are not considered to justify the additional capital and management attention required from Bunnings and Wesfarmers.”
Wesfarmers said Homebase‘s operating performance had improved in recent months under the new management team headed up by Damian McGloughlin, who will continue to lead the company in delivering the new management’s turnaround plan.
Scott added: “We wish Damian and the team well during the transition and as they take the business into its next chapter under a new owner with a track record of retail turnaround in the UK.”
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