Bunnings brand to replace Homebase as Home Retail agrees Australian sale

Home Retail Group has agreed to sell its Homebase division to Australia's Wesfarmers in a move which will see the well-known brand disappear.

The FTSE 250 company announced the £340m sale to one of Australia’s biggest retailing groups on Monday, following confirmation last week it was in advanced talks.

Wesfarmers will acquire the entire Homebase business including all its stores and dedicated distribution centres.

However, its product brands, including Habitat, Schrieber and Hygena, won’t be in the sale, though a year-long licence for some of these brands will be granted to the new owners.

Once finalised, Wesfarmers will replace the Homebase brand with its Bunnings brand, which is well-known around Australia and New Zealand.

Shareholders are set to receive around £200m in the deal, which is expected to be completed by the end of March.

“Wesfarmers is an experienced and successful retailer with exciting plans to invest in and grow their presence in the UK through Homebase,” said Home Retail chairman John Coombe.

“This Transaction crystallises value for our shareholders from our ownership of Homebase and specifically the work that we have been doing through the Productivity Plan.”

Bunnings managing director John Gillam, who has been advised by ITV chairman Archie Norman, said the UK DIY chain has an established and scalable store platform.

“The acquisition is the first step in building a further growth platform for Bunnings with additional planned investment of approximately £500 million in the Homebase team and assets to build a new Bunnings-branded business over three to five years.

“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.”

The deal will leave Home Retail Group with Argos, which is going through a transformation plan, and its financial services division.