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Homebase snaps up dozens of Focus stores

Home Retail Group (HRG), the owner of Homebase, has bought 27 stores from Focus DIY, the ailing home improvement retailer that was bought by a private equity firm for £1 in June.

The stores will be refitted with Homebase shopfronts after they are transferred to the Home Retail Group at the end of this year, bringing to 330 the number of Homebase stores. It paid £40 million in cash.

HRG hopes that the shops will be refitted in time for the peak spring period. It estimates that the refit capital investment will total about £30 million and calculates that it will incur transitional operating costs of about £15 million.

The acquisition will raise the total number of Homebase stores to about 330. In all, Focus has sold 41 stores for a total of £68 million.

Travis Perkins bought seven stores to add to its Wickes home improvement chain, and the others are thought to have gone to supermarkets.

Cerberus brought in Bill Grimsey and Bill Hoskins, who led the rescue of Wickes in the mid-1990s, as chief executive and finance director, respectively, when it bought Focus this year. In July they announced a review of Focus’s worst performing stores.

“There is a very good business lurking behind a lot of debt,” Mr Grimsey said at the time.

Focus said in a statement that the 41 stores included only 13 of the 52 loss-making stores previously identified for disposal.

The company still plans to sell the balance of 39 stores, reducing its portfolio to 176.

It hopes to open eight new stores next year.

Cerberus paid Apax Partners and Duke Street Capital, the private equity firms, only £1 for their shares in June.

Cerberus took on the group’s £180 million debt and repaid bondholders 40p in the pound, valuing the company at £225 million.

Focus, founded by Bill Archer in 1987, grew through a series of acquisitions before it fell victim to the downturn in the DIY sector in 2005.

Source : Times online

11 October 2007
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