Massive Masters sell-off begins
MORE THAN half a billion dollars of discount hardware will be offloaded in a massive fire sale after Woolworths set a closing date for its failed home improvement chain Masters.
The supermarket giant drew a line under its disastrous experiment with hardware on 24 August, announcing the sale of its Home Timber and Hardware chain to Mitre 10’s owner, Metcash, and the sale of its Masters Home Improvement stores.
Masters stores will close their doors for good on or before December 11, Woolworths said. It first flagged its exit from the business in January.
Everything from paint, timber, barbecues, vacuum cleaners and all other Masters stock, worth between $600 million and $700 million, will be sold off in a fire sale.
Woolworths expects to net $500 million from the discount sale.
The company has appointed the Great American Group, part of one of the world’s largest inventory divestment specialists, to manage the sell-off, with the support of Master staff.
Woolworths said it would honour customer gift cards, warranties, returns and laybys, and would complete any contracted installation projects.
“Since the sale process began, our 7700 staff in the Home Improvement businesses have worked extremely hard in an uncertain environment and we sincerely thank them for their commitment,” Woolworths chief executive Brad Banducci said.
“We will work hard to find Masters employees jobs within the group or pay full redundancy where suitable roles are not available.”
Since 2009, Woolworths and its joint venture partner, US hardware giant Lowe’s, invested $3.48 billion in the home improvement project, including Masters and the profitable Home Timber and Hardware business.
Woolworths announced it was exiting hardware in January, after it racked up losses of more than $600 million in the four years prior.
Home Consortium, whose owners include the families behind the Chemist Warehouse and Spotlight, will buy the joint venture vehicle, Hydrox Holdings, for about $800 million including debt.
Home Consortium said it was already in negotiation with retailers including Anaconda, JB Hi-FI, Super Amart, BBQs Galore, Woolworths Supermarkets and Dan Murphy’s to take over the 61 properties.
Bunnings confirmed it planned to take over 15 Masters sites. Eleven of those would replace existing stores.
Woolworths will net $165 million by selling Home Timber and Hardware to Metcash, allowing it to merge with Mitre 10 and create a new $2 billion player in the sector.
Woolworths said it would make gross proceeds of $1.5 billion by selling out of its hardware assets.
The latest key points in Woolworths home improvement exit (as at 24 August) were:
• Woolworths Limited (Woolworths) has agreed three separate contracts to facilitate its exit from Home Improvement for estimated gross proceeds of $1.5 billion • Masters will cease trading at all stores on or before 11 December 2016 Woolworths will work hard to find Masters employees jobs within the Group, or will pay full redundancy where suitable roles are not available Woolworths will honour all customer gift cards, product warranties, returns, lay-bys and contracted home improvement projects and will work constructively with all suppliers 1. Metcash to acquire Home Timber & Hardware Group (HTHG) for a headline purchase price of $165 million, with the business continuing to trade
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