Interesting !2 Aug 2014 23:05
Homebase pursued by DIY investment giants
Apollo and OpCapita are believed to be working on takeover plans amid speculation the home improvement chain is to be put up for sale after years of disappointing trading
By Ben Marlow8:19PM BST 02 Aug 2014 CommentsComment
A clutch of rival turnaround investors have begun circling Homebase, the DIY giant, amid heightened speculation it is to be put up for sale.
Funds including Apollo, the giant Wall Street investment house, and OpCapita, the firm that led the controversial takeover of Comet, have begun drawing up takeover plans for the struggling home improvement and garden equipment chain.
Their interest has been fuelled by the suggestion that Home Retail Group, the parent company of Homebase, has begun weighing up plans for its sale after years of subdued trading.
Homebase has 360 stores and annual sales of £1.5 bn but has struggled to compete with its bigger rival B&Q.
Expectations that Homebase would be sold were triggered earlier this year when John Walden, Home Retail Group’s new chief executive, announced, just one month after taking charge of the company, that he was considering a full-scale review of the company.
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Home Retail also owns Argos, the catalogue retailer, which is undergoing a majopr transformation into a modern, online brand after years of tumbling earnings.
Argos accounts for 70 per cent of group sales and profits.
The high street chain will initiate a trial later this year to allow shoppers to order a product online and have it delivered to their home or local store on the same day.The same-day service is part of a five-year plan by Home Retail to strengthen the catalogue retailer for the digital age.
Argos and Homebase were previously part of the GUS conglomerate, which also included Burberry, the luxury retailer.
Presenting full-year results in April, Mr Walden said that he would “take an independent look at strategy and organisation structure, and consider the group’s priorities going forward”.
“As a group we need to figure out what we stand for – why are we a group?” the 54 year-old boss said earlier this year.
Several other big firms that specialise in snapping up weak companies are watching the situation closely including Hilco, which took over HMV as it was about to collapse in 2011, and Endless, which recently bought Kiddicare off Morrisons. Their interest has been stoked by suggestions that Home Retail Group is considering paying a sizeable dowry to offload Homebase.
However, Walden is yet to confirm the outcome of his review and the likely future shape of the group.
Homebase began struggling during the recession when banks reined in the easy lending that had fuelled big DIY