There’s always a shimmer of excitement that runs through the retail sector when a big acquisition deal is on the cards.
New Mobility
There’s always a shimmer of excitement that runs through the retail sector when a big acquisition deal is on the cards. Two are happening at the moment, but superstition always says that these things come in threes. So who will be next?
What we do know is that retailers including The Range and B&M have been touted as possible new owners for Homebase. It would be great to see this sometimes neglected brand given some TLC.
Homebase has had a complicated history. Founded by Sainsbury’s in the late 1970s, the chain was a forward-looking affair that brought supermarket-style store formats to the DIY sector. It was run from the Sainsbury’s HQ, then on Stamford Street in South London, and grew by a combination of expansion and acquisition.
It bought rival Texas Homecare, remembered by those old enough for its ‘distinctive’ advertising, in 1995.
By the early part of this century Sainsbury’s sold the Homebase chain in a two-part deal worth an impressive £969 million.
It sometimes feels that the chain has bounced around between a series of owners since. Kingfisher Group, parent of B&Q, owned it for a while before selling it to GUS, where it became a sister chain to Argos. The retail division of GUS then became Argos Retail Group, later renamed Home Retail Group. Argos, Laura Ashley and Habitat concessions opened in a number of Homebase stores.
Australian retailer Wesfarmers bought Homebase in 2016, for £340 million – a fraction of the price Sainsbury’s had sold it for years before. Wesfarmers attempted to rebrand Homebase under the Bunnings Warehouse brand used in Australia and New Zealand, but it didn’t catch on with UK shoppers.
By 2018 Wesfarmers was reporting losses of £57 million relating to its takeover of Homebase. Turnaround specialist Hilco bought Homebase from Wesfarmer for £1. Hilco used a CVA (company voluntary arrangement) to restructure the retailer, renegotiate leases and close unprofitable stores. It is now seeking to sell it again.
Is there space in the market for Homebase to regain its old position in the market? It’s encouraging to see that some established retailers clearly think so.
Meanwhile Currys is rejecting takeover bids from US company Elliott, saying that the offer undervalues the chain. The US group is competing with Chinese group JD.com, which has also expressed an interest in buying Currys.
Currys has a less complicated history than Homebase. It became a popular retailer of electrical products in the 1960s (thought it had originally been established as a bicycle retailer). It was acquired by rival Dixons in the 1980s. The company traded under both brands until aligning stores under the Currys name; for a time they traded as Currys PC World, before reverting to simply Currys.
Elliott’s offer values Currys at around £757 million, up from an earlier bid of £700 million. The BBC quotes an analyst at AJ Bell, who says that “a rather tasty bidding war” between Elliott and JD.com could now establish the true value of the Currys brand.
Perhaps by the time that happens, we will find out who that third big retailer to be taken over is going to be.
