After talks with several potential buyers, Homebase may soon be sold.
Hilco Capital is said to have had discussions with several parties including The Range, B&M European Value Retail and discount retailers.
Homebase, the brand name and intellectual property of 170 stores in the UK and Ireland may be sold to a new owner.
One source stated that Hilco had extracted all the value they wanted from Homebase, and now is looking to leave.
Homebase was acquired by the turnaround specialist after an unsuccessful period under Wesfarmers. The Australian company had purchased Homebase for £340 million only 18 months before. Wesfarmers was accused of not understanding the differences in Australian and British retail and underestimating B&Q’s competition.
Hilco, the company that bought Homebase in 2007, launched a controversial procedure of insolvency to reduce rents and shut hundreds of stores. Homebase terminated the arrangement 18-months early after it renegotiated its leases and increased profitability.
The group owns and operates approximately 150 Homebase outlets, 15 Bathstore outlets, and two Decorate by Homebase shops. These are smaller versions of the main chain.
Hilco put its business on the market in 2020, hoping to take advantage of the boom in home improvement retailing as people renovate their homes and divert spending away from leisure and holidays to DIY projects.
Sky News reported that Hugh Osmond was assembling a £300 million takeover bid to buy Homebase by 2021 under his Osmond Capital Investment vehicle. According to Sky News, he was not believed to be the only bidder for the chain. However, the identity of the other bidders is unclear. The talks did not result in a deal.
Sources suggest that CDS Superstores International (the owner of The Range, Wilko and Homebase) has looked into buying Homebase. CDS, however, said that it was not “in active conversations at this time”.
One retail observer said that selling to CDS Superstores such as B&M Home Bargains, Dunelm, Home Bargains, or B&M would make sense because of the products they sell.
Homebase’s operating profit was 63.7 million pounds sterling on sales of 788.2 million pounds sterling in the year ending December 2021. The company had £76.8 millions in “cash on hand and in the bank”. Homebase’s accountants stated in its accounts that the “availability of sufficient funding by the ultimate controlling party for the HHGL group remain uncertain until they are received.” These events or circumstances indicate a material uncertainly that could cast doubt on HHGL’s ability and the company’s to continue as a business.
Homebase confirmed that it had received the funding and said that they had “significant headroom” to trade in the coming year.
Hilco, Homebase, and B&M have declined to comment.