Homebase off to Wesfarmers – Sainburys to buy Argos?

After an offer was rebuffed last week for the whole company, Home Retail Group has just sold DIY retail chain Homebase to Australian company Wesfarmers. It is increasingly likely that Sainsburys will now make an offer for Argos, its primary focus in making the offer last week.

The deal, worth £340 million, took place over the weekend, and the 265 Homebase stores will be rebranded Bunnings, a chain of DIY stores in Australia that Wesfarmers owns already, subject to shareholder approval.

Shareholders of the Home Retail Group must approve of the deal, but if they give it the go-ahead it should go ahead by the end of the first quarter of this year. Homebase was set up by Sainsburys over 30 years ago, and the grocer made a bid for the Home Retail Group last week.

Sainsburys however was predominantly interested in taking over the homewares company Argos after the company recently launched its Fast Track delivery brand where customers can have goods delivered on the same day. The delivery programme, combined with the range of goods that Argos sells, is attractive to Sainsburys in an apparent plan to take on Amazon in the UK as the online giant seeks to get into same delivery and groceries as well as homewares.

The deals taking place could be a major change for the online retail ecosystem as a whole, with Sainsburys and Argos major players in the e-commerce and retail markets already. Home Retail Group’s divesting Homebase is a signal that Argos is ripe for the picking, and a new offer from Sainsburys is expected by the end of the week. That the deal is on the table with the Australian company is a sign that Argos may well be part of Sainsburys within 2016.