Home Retail, which has become something of a British takeover target of late, is in advanced talks to sell the Homebase chain to Australia’s Wesfarmers for £340m in cash, enabling it to give Argos all the attention.
Wesfarmers is a leading hardware retailer in Australia, and its second biggest supermarket owner in Australia. If the bid, which has thrown a spanner in the works for Sainsbury’s, is accepted, then Wesfarmers will look to “reinvigorate” Homebase’s assets.
"The UK home improvement and garden market is an attractive and growing market," Wesfarmers said in a statement confirming a conditional offer Homebase, Britain’s second largest home improvement and garden retailer, had been made.
It is understood that Sainsbury’s approach to buy out the entirety of Home Retail in November came a couple of months after Wesfarmers started talks. The grocer’s interests lie predominantly in Argos, which it has already struck a relationship with.
In an analysts’ call on Wednesday morning, CEO Mike Coupe justified its bid citing that the combination of Argos and Sainsbury’s product lines would create a business that would rival Amazon, John Lewis and Marks and Spencer. He repeatedly declined to comment on Homebase, leading to speculation that the business would be offloaded were a sale to go ahead.
Home Retail Chief Exec John Walden said a sale represents good value for investors as it would come about a year into a three-year improvement strategy for the chain.
"The sale would allow the group to focus on Argos and its transformation plan, with an improved balance sheet and financial position, which I believe represents an even greater opportunity for building long-term shareholder value," he said.