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Discounter B&M Retail in talks to buy dozens of Homebase stores

Home Retail Group is in talks about a deal for B&M to acquire some of the stores it has earmarked for closure, Sky News learns.

The fast-growing discount chain B&M is in talks over a multimillion pound bid to take on dozens of Homebase DIY stores in a move that would underline the changing landscape of UK retailing.

Sky News understands that B&M, which listed on the London Stock Exchange earlier this year, has approached Home Retail Group (HRG) about buying "a substantial number" of the 80 Homebase stores that it has earmarked for closure during the next three years.

A deal has yet to be reached between the two companies, and other retailers have also approached HRG about taking on some of the sites following the announcement of its streamlining plan last month.

However, people close to the situation confirmed B&M's interest and said they would be surprised if agreement was not reached for it to acquire at least some of the stores.

B&M, which is chaired by the former Tesco chief executive Sir Terry Leahy, has been expanding rapidly amid growing consumer demand for discounters' products.

Poundland, a competitor to B&M, also listed on the stock exchange this year and has set out similarly ambitious expansion plans.

Next week, B&M will report its maiden interim results as a public company, and is likely to be questioned about whether the pace of its growth is sustainable.

The company operates more than 400 stores in the UK as well as the JA Woll brand in Germany.

It has already taken on sites on an ad hoc basis from retailers including B&Q, Currys, Staples and Wickes as those chains react to structural changes in their sectors.

Earlier this week, J Sainsbury signalled a slowdown in its UK openings programme, mirroring a similar recent pronouncement by crisis-hit Tesco.

Last month, B&M appointed Karen Hubbard, a former Asda property executive, to lead its expansion strategy, which at the moment involves opening approximately 50 UK stores annually.

Announcing plans for Homebase’s downsizing, John Walden, HRG chief executive, said:

"Homebase will pursue a three-year plan through to the end of FY18 to improve the productivity of its store estate, strengthen its propositions and accelerate its digital capabilities by leveraging Argos' investments. 

"This will position Homebase as a smaller but stronger business, ready for investment and growth."

B&M and HRG declined to comment.

Source: Mark Kleinman - Sky News.

Read the full news article here.

14 November 2014

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