Wesfarmers announced at the end of May that it had agreed to divest the Homebase business in the United Kingdom and Ireland to a company associated with Hilco Capital.
Under the terms of the agreement, the buyer acquires all Homebase assets, including the Homebase brand, its store network, freehold property, property leases and inventory for a nominal amount. The 24 Bunnings pilot stores will convert to the Homebase brand promptly following completion. Wesfarmers will participate in a value share mechanism whereby it would be entitled to 20% of any equity distributions from the business. This obligation is not limited by time, allowing Wesfarmers to participate in any proﬁtable divestment of the business in the long-term. Wesfarmers Managing Director Rob Scott said the agreement follows a comprehensive review of the Bunnings United Kingdom and Ireland (BUKI) business which considered a range of options to improve shareholder returns.
“A divestment under the agreed terms is in the best interests of Wesfarmers’ shareholders and will support the ongoing reset and repositioning of the Homebase business,” Mr Scott said.
“While the review conﬁrmed the business is capable of returning to proﬁtability over time, further capital investment is necessary to support the turnaround. We acknowledge the past six months have been particularly challenging for the BUKI management and our team members in the UK and Ireland and we thank them sincerely for their hard work and commitment. The operating performance of the business has improved in recent months under the new management team led by Damian McGloughlin and he will continue to lead Homebase in delivering management’s turnaround plan.” With the conclusion of the review, Wesfarmers advises that it expects to record a loss on disposal of £200 million to £230 million in the Group’s 2018 full-year ﬁnancial results, subject to completion and review by Ernst & Young.