Australian DIY retailer Bunnings is set to launch in the UK after its parent company Wesfarmers agreed to acquire 265 Homebase stores for £340 million. The deal, which requires shareholder approval, would make Bunnings the second largest home improvement and garden retailer in the UK and Ireland, behind B&Q.
Wesfarmers plans to invest £500 million over the next three to five years to transform Homebase stores into the Bunnings brand. The first handful of Bunnings-branded outlets are expected to open within a year. The company aims to improve store operations, cut prices, widen product ranges, enhance service, and appeal more to tradesmen.
Homebase's current management team will be replaced by Bunnings executives, with Peter Davis as managing director and Rodney Boys as finance director. However, current chief executive Echo Lu has been asked to stay on for at least a year to assist with the transition.
Wesfarmers managing director Richard Goyder said the company had studied the UK market for over a year and was confident in the opportunity. Bunnings managing director John Gillam dismissed claims that DIY is in decline, stating, "We see a huge market opportunity for good quality home improvement and garden retailing."
The sale of Homebase increases the likelihood of Sainsbury's making a new offer for Argos, the other business within Home Retail Group. Sainsbury's has until 2 February to decide whether to raise its rejected £1 billion offer. Analysts note that a standalone Argos faces challenges, including declining sales and increased costs from the national living wage.
