Wesfarmers abandoning its UK bet on Bunnings via Homebase
WESFARMERS will pull out of the UK hardware market, announcing it will sell the Homebase chain it bought two years ago to turn into Bunnings.
The Perth- based conglomerate has agreed to sell Homebase to UK- based turnaround specialist Hilco Capital, with the divestment expected to be completed by June 30.
Wesfarmers will record a $ 323 million to $ 406 million loss on the disposal and the 24 Bunnings pilot stores in the UK will be rebranded as Homebase.
Wesfarmers managing director Rob Scott said a review of the Bunnings United Kingdom and Ireland ( BUKI) investment had found the business could be turned around but the cost and risk could not be justified.
“The investment has been disappointing,” Mr Scott said, blaming poor execution of the Bunnings rollout and a downturn in the UK trading environment. The company launched a review into BUKI in February after it led to $ 1.02 billion of impairments and an 87 per cent drop in Wesfarmers’ first- half profit.
Mr Scott said BUKI’s performance had improved in recent months under a new management team led by Damian McGloughlin, who will continue to lead Homebase’s turnaround under the new owners.
Wesfarmers will participate in a value share mechanism where it will be entitled to 20 per cent of any equity distributions from the business if it is returned to profitability and sold.