Home Retail surges as former Garden Centre exec said to eye Homebase

According to the Financial Times, Marshall has been looking at Homebase for the last couple of years and has been holding talks with private equity firms regarding a possible bid.

Investec, which rates Home at ‘buy’, said a splitting up of the group was feasible.

“We conservatively value Homebase at £230m with the balance sheet supporting a group value of £1.45bn (180p/share),” it said.

Investec said the weakness in Home’s share price due to issues relating to Argos does leave it vulnerable to a bid for one of its operating companies or the group as a whole.

CMC Markets analyst Jasper Lawler said although no offer has been made, Marshall "outing himself as a possible bidder implies a deal may not be too far away".

"Profits have been rising under former Tesco exec Echo Lu so there’s a feeling that shareholders might get better value if Homebase was stripped away from Argos which last month forced Home Retail into a shock profit warning before the key holiday season," he added.

At 1033 GMT, Home Retail shares were up 6.2% to 109.30p.