In our earlier blog Sainsbury’s and Home Retail Group: A perfect match or strategic distraction we looked at the synergy that any deal may bring. Homebase was a piece of the jigsaw that didn’t seem a natural fit.
However today there has been an announcement that Wesfarmers are to buy Homebase in a £340 million deal. They are already very active in the outdoor living and DIY segment in Australia operating under the Bunnings brand, and they intend to re-brand all Homebase stores under this umbrella in a £242m investment programme. This will be Wesfarmers first expansion into the UK market.
The deal is subject to shareholder approval, but if it gets the go ahead it looks set to be completed in the next three months, with all stores being re-branded in a programme in the next few years.
As for Argos, well speculation is that Sainsbury’s will submit a counter offer to purchase this part of the Home Retail Group. Without the Homebase business this does make a good fit and will offer them greater delivery capability and a widened non-food product portfolio.
For both acquisitions, integration of retail technology capability and future innovation will be key to success in maximizing these investments.
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