Another potential takeover candidate

Homebase is Number 2 in the United Kingdom’s DIY retail market with 298 stores and the recently launched Megastore format. Last year the company achieved profits of £ 64.6 mio on sales of £ 1.43 bn. According to comments from analysts, this step is not being taken so much because Sainsbury is dissatisfied with its DIY business but because the group needs resources to underpin its considerably larger supermarket division. Sainsbury was the market leader in British food retailing until the late nineties but has recently been forced to yield that position to its comrade-in-arms Tesco.
Whether Homebase will actually be sold is at present as uncertain as who the eventual buyer might be
The Sainsbury group has this year succeeded in gaining a new chief executive in the person of Sir Peter Davis, who is extremely well known in the industry and is expected to turn the company’s fortunes around.
There is much speculation within the industry at present about who the eventual purchaser could be, should Homebase actually be sold. It is said that the extremely acquisition-happy Focus Do It All group had already made a bid, but has removed itself from the running by its acquisition of Wickes. But the group’s financial backers, Duke Street Capital, clearly intend to create a serious contender to stand up to B&Q. The purchase of Homebase would catapult the group into a market-leading position and oust B&Q from the top position for the first time in 20 years.
Home Depot has likewise been brought into the speculation, though this is considered fairly unlikely, since the differences between the two trading com-panies are too big. Some analysts think that a large European retailer such as Leroy Merlin could be interested, since such a move would give it a good position in the British market. Some years ago the Belgian GIB group held a minority interest in Homebase.
One of the latest speculations is that the former chief executives of Texas Homecare and B&Q, Ron Trenter and Jim Hodkins (who has also worked for Home Depot), could get together to buy the concern. These two probably have more experience in DIY retailing than anyone else in the industry. Their return as a team would certainly give the other operators much food for thought.