The Australian parent company of Homebase has reportedly received final bids from three turnaround investment firms, plunging 11,000 jobs into uncertainty.
According to Sky News, Alteri Investors, former owners of Austin Reed, and Hilco, which bought HMV out of administration in 2013, were the leading candidates to buy Homebase.
Endless has also been identified as another potential bidder for Wesfarmers’ UK operations, which also includes the local offshoot of Australian DIY chain Bunnings.
It’s expected that Wesfarmers – which is being advised by Lazards and restructuring specialist Alvarez & Marsal – would recommend a preferred bidder this week.
The announcement could place the future of 11,000 staff members in jeopardy, especially with Alteri and Hilco reportedly seeking to restructure Homebase by closing some of its 220 stores.
Wesfarmers recently reported third-quarter sales decline of 13.5 per cent to £211 million for Homebase and Bunnings UK, alongside a like-for-like sales drop of 15.4 per cent.
The picture was the same for the financial year to date, which saw sales drop 14.7 per cent to £726 million, and a like-for-like sales decline of 13.9 per cent.
This compares to a strong performance in Australia and New Zealand, which rose 8.9 per cent to $3 billion for the quarter, with like-for-like sales rising 7.7 per cent.
It’s thought that Homebase could lose around £190 million this financial year against revenues of roughly £1 billion.
Wesfarmers’ £340 million acquisition of Homebase in 2016 has led to disastrous results for the company, with consistent losses and being forced to write off more than £500 million.
Of the total 234 Homebase stores that existed at the time of Wesfarmers’ takeover, 24 have been converted to the Bunnings format.
However, Wesfarmers has suspended the revamping and rebranding programme.
Wesfarmers promised to update investors in early June. Bunnings UK declined to comment.