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Hugh Osmond assembles £300m takeover bid for Homebase

·4-min read
LONDON, UNITED KINGDOM - 2020/08/04: A logo on a branch of DIY store Homebase in London. (Photo by Dave Rushen/SOPA Images/LightRocket via Getty Images)
City sources said this weekend that the entrepreneur's investment vehicle, Osmond Capital, had emerged as a serious bidder for Homebase. Photo: Dave Rushen/SOPA Images/LightRocket via Getty Images

Business tycoon Hugh Osmond is among the bidders in talks to acquire DIY retailer Homebase, in a deal worth £300m ($411m), it has emerged.

It comes after the chain was revived from the edge of collapse just three years ago.

According to reports from Sky News, Osmond, who is one of Britain’s wealthiest businessmen, is among a number of parties vying to buy the retailer.

City sources told the broadcaster this weekend that the entrepreneur's investment vehicle, Osmond Capital, had emerged as a serious bidder for Homebase. Osmond is also currently spearheading a legal challenge to the government’s coronavirus restrictions on the hospitality sector.

One source said the exit was likely to be the “best-ever deal” for its owner Hilco Capital.

The turnaround specialist, which had also previously owned HMV, is also said to have weighed a stock market flotation of the business as it seeks to secure new ownership.

Hilco bought Homebase for a nominal sum of £1 in 2018 after a troubled period under the ownership of Wesfarmers, an Australian group. Wesfarmers snapped up the chain for £340m in 2016 but its attempts to import its Bunnings home improvement brand to the UK, by converting Homebase stores, failed.

READ MORE: Hilco puts DIY chain Homebase up for sale

Since acquiring the business, Hilco has closed underperforming stores, slashed rents and cut jobs to shore up the firm’s finances. It also shut two of Homebase's six distribution centres and secured a £95m lending facility from Wells Fargo (WFC).

The home furnishings retailer entered a company voluntary arrangement (CVA) soon after Hilco acquired it, resulting in scores of store closures and more than 1,500 job losses.

A CVA is a formal agreement between a business and its creditors which gives firms the chance of recovery.

It sets out how repayments of company debts should be made to creditors and can deliver a better outcome than an administration or liquidation. After 14 days creditors are asked to vote and at least 75pc must agree.

CVAs have become increasingly popular over the last few years as Britain’s high street suffers from declining footfall, increased business rates and the rise of online shopping. The coronavirus pandemic has only heightened the issues retailers are facing.

READ MORE: How CVAs are reshaping Britain's high streets

A Homebase spokeswoman said: "As we announced at the end of last year, we're looking at a number of options to further accelerate our growth plans, and this process is still ongoing."

If a sale goes through Homebase will have its fifth owner in just five years.

Homebase, which has 155 shops and 15 Bathstore outlets, has benefited from a recent boom in home improvement during lockdown as people were forced to stay at home to curb rising infections of coronavirus.

Last month it was reported that retail sales rebounded slightly in February as Brits spent money on home improvement projects and lawn furniture in preparation for easing lockdown restrictions.

Official figures published by the Office for National Statistics (ONS) showed that UK retail sales rose by 2.1% last month, in line with forecasts.

February's sales were boosted by strong demand for household goods. Sales in this category rose by 16%.

The ONS said there was "anecdotal evidence" this rise was caused by demand for "DIY products as consumers continue to improve their homes during lockdown" and demand for outdoor furniture "in preparation for the easing of lockdown restrictions, particularly the ability to meet friends and relatives in private gardens as the weather improves."

Last month rival B&Q also reported strong sales thanks to home improvement projects and said "a new generation of DIY'ers" had emerged in response to lockdown.

B&Q owner Kingfisher (KGF.L), which also owns Screwfix and other home improvement brands in Europe, said sales rose by 7.2% last year to reach £12.3bn ($17bn). Gross profit rose 7.5% to £4.5bn in the 12 months to 31 January 2021. Pre-tax profit improved a huge 634% to £756m.

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