The Bunnings brand will enter the UK’s $79 million home improvement market after acceptance of owner Wesfarmers’ $705 million bid for the Homebase chain.
Wesfarmers, which also owns the Coles supermarket chain, said the £340 million acquisition of 265 Homebase stores would make it the second largest home improvement and garden retailer in the UK and Ireland.
Homebase reported revenue of £1,461.2 million ($A3.05 billion) for the year ended August 29.
The cost of overhauling the stores means the acquisition from the UK’s Home Retail Group is expected to have an immaterial effect on Wesfarmers’ earnings per share, and return on equity for three years, after which it is projected to contribute positively.
“Bunnings is well placed to unlock value from the Homebase business and has a proven track record in delivering growth, both organically and through acquisition,” Wesfarmers managing director Richard Goyder said in a statement.
“The £38 billion UK home improvement and garden market is a large and growing market with strong fundamentals.”
Mr Goyder sought to reassure investors over a move that came with the Australian dollar having declined about 30 per cent against the British pound over the past three years.
“The opportunity to enter this attractive market through the acquisition of Homebase has been comprehensively researched and carefully considered by Wesfarmers and Bunnings,” Mr Goyder said.
“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 into the UK and other markets.”