Homebase bought by Wesfarmers for £340m

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Wesfarmers also owns one of Australia’s biggest supermarket chains, Coles

Australian retail giant Wesfarmers has agreed to buy UK DIY chain Homebase from its owner, Home Retail Group, for £340m (A$705m; $485.2m).

Wesfarmers already owns Bunnings – Australia’s leading supplier of outdoor living and home improvement products.

The Australian retailer said it would spend a further £500m to build up the Homebase business under the Bunnings brand.

The deal is subject to shareholder approval.

Wesfarmers, which owns one of Australia’s biggest supermarket chains, Coles, said the UK’s home improvement and garden market was worth £38bn.

Homebase is the second-largest home improvement and garden products retailer in the UK and Ireland.

The deal is expected to be wrapped up in the first three months of this year, provided shareholders of Home Retail Group agree to the purchase.

‘Compelling opportunity’

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Bunnings managing director John Gillam said the acquisition represented a “compelling opportunity to enter the attractive UK home improvement and garden market”.

“Homebase has an established and scalable store platform with strong representation in high density areas,” Mr Gillam said. “The stores are well-sized for the UK market and support warehouse merchandising,” he added.

The move was the first step in building up a new Bunnings-branded business “over three to five years”, Mr Gillam explained.

“We will combine essential local elements with the best of Bunnings to bring customers in the UK and Ireland an exciting new home improvement and garden offer.”

Last week, Home Retail Group confirmed it was in advanced talks to sell Homebase to Wesfarmers.

Announcing the deal, Home Retail Group chairman John Coombe said: “We are very pleased to have reached agreement with Wesfarmers regarding the sale of Homebase. We believe that this is the best deal for shareholders and for the business.”

Home Retail Group itself is a bid target for UK supermarket chain Sainsbury’s, which is interested in Home Retail Group’s other major business, Argos.

Earlier this month it emerged that Sainsbury’s had a takeover approach for Home Retail Group rejected in November last year.

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Homebase bought by Wesfarmers for £340m