Homebase could soon be sold to new owners after talks were held with a number of potential buyers.
Hilco Capital, which bought the troubled DIY and garden chain for £1 in 2018, is believed to have held discussions with a number of parties, including The Range and B&M European Value Retail, the discount retailers.
Insiders suggested that Homebase’s brand name, intellectual property and 170 stores across the UK and Ireland could be broken up and sold off under new owners.
“Hilco will have extracted the value it wants from Homebase and is now looking to exit,” one source said.
The turnaround specialist acquired Homebase after a disastrous period under Wesfarmers, its Australian owner, which had paid £340 million for the group only 18 months earlier. Wesfarmers, which made a raft of changes to Homebase’s stores and range, was accused of underestimating the competition from the likes of B&Q and of failing to understand the differences between Australian and British retail.
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In the same year it bought Homebase, Hilco launched a company voluntary arrangement, a controversial insolvency procedure, to cut rents and close hundreds of stores. Homebase ended the arrangement 18 months early after it renegotiated most of its leases and improved profitability.
The group operates about 150 Homebase stores and owns about 15 Bathstore outlets and a couple of Decorate by Homebase stores, which are smaller high street versions of its principal chain.
Hilco first put the business up for sale in 2020 as it looked to capitalise on the pandemic boom for home improvement retailers, when people renovated their properties and diverted spending from holidays and leisure to DIY projects.
Hugh Osmond, one of Britain’s wealthiest businessmen, was understood to have been assembling a £300 million takeover bid for Homebase in 2021, under his Osmond Capital investment vehicle, according to Sky News. He was not thought to be in exclusive talks to buy the chain, although the identity of other bidders was unclear. The talks never came to fruition.
Sources suggested that CDS Superstores International, the owner of The Range and Wilko, had looked at buying parts of Homebase. However, CDS said it was “not in active conversations currently”.
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One retail onlooker said that a sale to the likes of CDS Superstores, B&M, Home Bargains or Dunelm would “make sense in terms of what they sell”.
In the year to December 2021, the last for which accounts are available, Homebase made an operating profit before exceptional items of £63.7 million on sales of £788.2 million. It had £76.8 million of “cash in the bank and in hand”. Homebase’s auditors noted in the accounts that “the availability of sufficient funding from the ultimate controlling party to the HHGL Group remain uncertain until received. These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the company’s and HHGL Group’s ability to continue as a going concern.”
Homebase said the funding had been received and that the company had “significant headroom to trade the year and beyond”.
Hilco, Homebase and B&M declined to comment.
