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11 Nov 2020 | 12:02

Homebase put up for sale

(Sharecast News) - DIY chain Homebase has been put up for sale by its owner Hilco, just two years after the turnaround specialist acquired it for £1. Hilco agreed to buy Homebase from Wesfarmers in May 2018. The Australian conglomerate had paid £340m for the retailer only 18 months previously, but its strategy of converting stores into its Bunnings format proved unsuccessful.

Earlier this year, Homebase said it had returned to profit ahead of plan, with 2019 earnings before interest, tax, depreciation and amortisation coming in at £3.2m compared to a loss of £114.5m a year previously, and in February the retailer terminated its company voluntary arrangement.

In a statement on Wednesday, Homebase confirmed: "Having built an excellent foundation, Homebase is moving out of its turnaround phase and entering into an exciting new chapter of growth. Now is the right time for us to be starting conversations with potential new owners to accelerate our plan."

The chain is understood to have benefited from a surge of interest in DIY, after the Covid-19 pandemic forced people to spend more time at home.

Damian McGloughlin, chief executive of Homebase, told the Financial Times that people spending time away from the office had helped them "fall back in love with their homes". But he insisted that a transfer of ownership within two to three years was "always part of the plan", and with profitability restored "now was the right time".

McGloughlin told Retail Week that there was "a large number" of interested parties. Information memoranda are expected to be sent out to retailers and private equity firms either this week or the next.

However, chief financial officer Andrew Coleman did not rule out a stock market listing, telling the FT: "It is something that we have looked at. We'll have to see how things play out, but all options are on the table."

Kingfisher, the blue chip owner of rival B&Q, has seen its shares improve by around a quarter this year.
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