Wesfarmers Limited (ASX: WES) (Wesfarmers) confirms it has made a conditional offer to acquire Homebase from Home Retail Group plc (LSE: HOME) for cash consideration of £340 million (A$699 million).Wesfarmers and Home Retail Group began discussions in September 2015 and due diligence work commenced under a confidentiality agreement in October 2015. An exclusivity agreement was signed in early December 2015 and confirmatory due diligence has now been completed. Transaction documentation is advanced and in the process of being finalised. There is no certainty the offer will lead to an agreed transaction.
Homebase is the second largest home improvement and garden retailer in the United Kingdom (UK) and Ireland, with 265 stores and reported revenue of £1,461.2 million for the 12 months ended 29 August 2015.
The strategic rationale for the acquisition is as follows:
• The UK home improvement and garden market is an attractive and growing market
• Homebase delivers an established and scalable platform with stores that are the right size for the UK market and support warehouse merchandising and a low cost operating model
• The acquisition would be the first step in a program which would invest in the Homebase team and reinvigorate core Homebase assets to build an exciting new Bunnings-branded business over three to five years
• The existing Homebase performance will be enhanced in the short-term through operational improvement The transaction will be subject, inter alia, to approval by Home Retail Group shareholders. Lazard is acting as Wesfarmers’ financial advisor.