Homebase flogged for £1 to HMV owner Hilco amid UK retail malaise

Troubled DIY chain Homebase has been flogged by Australian retail giant Wesfarmers, which blamed a “deterioration” of the UK economy and took a painful loss of up to £230m.

In a statement early this morning, Wesfarmers said the UK chain has been sold for £1 to turnaround fund Hilco – best-known known for buying what was left of high street stalwart HMV in 2013.

Wesfarmers had hoped to replace the iconic UK Homebase brand with Aussie favourite Bunnings. This will now be scrapped – the Homebase livery will be returned to 24 stores were the branding exercise was piloted in Britain.

The loss on disposal will be between £200m and £230m from the sale, which Wesfarmers Rob Scott said was “in the best interests of Wesfarmers’ shareholders”.

Read more: Ex-Comet owner Opcapita in running to buy Homebase

‘Nominal fee’

Hilco will hand over a “nominal fee” – believed to be £1 – to take control of the Homebase brand, its store network, freehold property, property leases and inventory. A deal was struck whereby Wesfarmers can take a fifth of future “equity distributions” from the business – i.e. dividends or capital returns to shareholders.

Despite its downbeat announcement, Scott insisted “the business is capable of returning to profitability over time”.

He continued:

Homebase was acquired by Wesfarmers in 2016. The investment has been disappointing, with the problems arising from poor execution post-acquisition being compounded by a deterioration in the macro environment and retail sector in the UK.

“While it is important that we learn from this experience, this should not discourage our team from being bold and diligent in pursuing opportunities to create shareholder value.”

Read more: Homebase horrors hit profits at Australian owner