Hilco acquires Homebase from Wesfarmers

The deal will see the GP acquire all assets, including the company's brand, store network, freehold property, property leases and inventory for a nominal fee, according to a statement. It also includes 24 stores currently operating under the Bunnings brand, which will rebrand as Homebase following the transaction.

Under the terms of the deal, which is expected to complete in June 2018, Wesfarmers will receive 20% of any future equity distributions from the company.

The vendor said in a statement that a recent review found that the Homebase brand could "return to profitability over time", but that this would require additional capital investment in order to support a turnaround.

Alteri Investors and Endless were also involved in the bidding process, according to a report by Sky News.

Wesfarmers, which acquired Homebase in 2016, said the brand had suffered from "poor execution post-acquisition" in addition to the deterioration in the macroeconomic environment and retail sector in the UK. The vendor announced that it expects to make a loss on disposal of £200-230m in its 2018 full-year financial results.

Hilco is pursuing a number of potential strategies, according to Sky News, including a potential company voluntary arrangement (CVA) and the disposal of certain assets.

The UK retail space has come under severe pressure in recent months, as was recently explored by Unquote. At the end of February, Rutland Partners-backed electronics retailer Maplin Electronics entered into administration, and Endless announced the divestment of footwear retailer Jones the Bootmaker to Pavers with a concession that the fortunes of the business "could not be turned around" due to adverse retail conditions.

This was followed in March by TPG Capital's Italian-themed restaurant chain Prezzo and Brait Private Equity-backed clothing and accessories retailer New Look, pursuing CVAs. Most recently, on the private equity front, Emeram Capital Partners-backed UK fashion retailer Bench entered into administration earlier this month.

Hilco has previously made successful investments in the UK retail turnaround space, including a high-profile deal for music retailer HMV.

Company
Headquartered in Milton Keynes and founded in 1979, Homebase is a DIY retailer. The company operates 220 bricks-and-mortar stores and saw revenues fall by 13.5% to £211m in the three months to March 2018, according to Sky News.

People
Wesfarmers – Rob Scott (managing director).

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• Topics
• Buyouts
• UK / Ireland
• Consumer
• United Kingdom
• Turnarounds