WHILE Woolies pulls the plug on Masters, Bunnings appears to be going from strength to strength, with its parent company Wesfarmers (ASX:WES) announcing it will spend $705 million on an expansion into the UK.
Wesfarmers has entered into an agreement to acquire Homebase from Home Retail Group (LSE:HOME), which follows an announcement last week that a conditional offer had been made to acquire the company.
The acquisition of 265 Homebase stores means Bunnings will be the second largest home improvement and garden retailer in the UK and Ireland.
Wesfarmers managing director Richard Goyder says the acquisition of Homebase, which reported revenue of $3.1 billion for the 12 months ending August 29, provides long-term value creation for Bunnings.
"Bunnings is well placed to unlock value from the Homebase business and has proven track record in delivering growth both organically and through acquisition," he says.
He says the $79 billion UK home improvement and garden market is a large and growing market with strong fundamentals.
"The opportunity to enter this attractive market through the acquisition of Homesbase has been comprehensively researched and carefully considered by Wesfarmers and Bunnings," he says.
"The Bunnings team has done a lot of work to make sure it understands the market and the opportunity, including having visited hundreds of stores, spending significant time researching the market and closely studying international retail expansions in the UK and other markets."
Bunnings managing director John Gillam says the acquisition is just the first step.
"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," he says.
"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."
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