Homebase purchase means tougher competition

Competition among DIYs and large garden centre chains is set to toughen up as Australian retailer Wesfarmers buys Homebase, according to former Garden Centre Group chief executive Nicholas Marshall. Wesfarmers' £340m offer for Homebase was a "knockout blow" for his interest, said Marshall, with the City valuing Homebase at around £200m.

Homebase: Nicholas Marshall described Wesfarmers’ £340m offer for chain as a ‘knockout blow’ for his interest - image: Homebase
Homebase: Nicholas Marshall described Wesfarmers’ £340m offer for chain as a ‘knockout blow’ for his interest - image: Homebase

Wesfarmers said: "The UK home improvement and garden market is an attractive and growing market." After it completed its plan to buy Homebase, Wesfarmers plans to roll out its Bunnings DIY brand in place of Homebase within five years.

Marshall said he was in "pole position" to take over Homebase, which owner Home Retail Group is looking to sell, with its other retail chain Argos going to Sainsbury's. But the offer from Wesfarmers, the Australian retail group that owns DIY chain Bunnings, was "double" City expectations.

Marshall added: "In the future British DIY and gardening retailing is going to have to sharpen up because B&Q is going to have to look to its laurels. Wesfarmers are going to want to gain market share because they are the biggest in Australia and New Zealand and won't want to be a small player here. So expect big competition in the UK DIY and gardening market.

"This will have an impact on the UK garden centre industry. The people with most to fear are the big players like Wyevale and Dobbies as opposed to independents who will continue to concentrate on being local. It's exciting but sad because I'd have liked to have had a go, but best of luck to them. At a time when B&Q are looking to see how to get out of units it is quite a bold decision to come in."

Marshall said the Wesfarmers deal will make the Sainsbury's offer for Argos easier "because they never wanted Homebase in the first place". He added that Homebase "would be looking for some good people from horticulture to revamp their garden offer". Marshall said he would look for a new vehicle, with Wyevale and Dobbies "likely to be for sale at some point".

Homebase - Trading statement shows effect of store closures
• 49,000+ products
• £1.5bn turnover
• 271 stores

Homebase parent company Home Retail Group’s trading statement for the 18 weeks from 30 August 2015 to 2 January 2016 reported mixed results, with Homebase down four per cent like-for-like following store closures.

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