Last week British retail group GUS snapped up Homebase, one of the country’s largest DIY chains, for £900m in a bid to broaden its operations.
Various surveys show that merger and acquisition activity this year is less than half of last year’s, but retail market deals are still taking place. As a result, KPMG corporate finance partner Richard Krajewski, believes the GUS buyout is a logical move, even though he was surprised by its sudden interest in the DIY market.
‘Across industries merger and acquisition transactions are well down.
But in the retail and consumer markets deals and take-overs are still happening. The consumer is still spending – with low interest rates it makes no sense to save money,’ he argued.
‘Every month consumer spending figures are better than expected.’ The Office for National Statistics last week said that retail sales volumes rose by 0.8% in October from September – up 6% on last year and ahead of analysts’ expectation of 5% increase.
Other examples of recent retail acquisitions are Tesco’s buyout of T&S, and Minerva’s bid to buy electronics and homeware group Allders.
The GUS acquisition follows the flotation of its highest profile operation, the Burberry fashion label in June this year. The deal intensified existing rumours of a pending Homebase flotation, but the company denied it had plans to launch the DIY chain on the stock market. ‘It’s in the realm of speculation,’ a GUS spokesman said.
Homebase’s 300 shops will become part of the GUS Argos Retail Group and continue to trade under its own name. Both groups were pursuing growth in the furniture and homeware market, and intend to combine their strategies to a total sales of £6bn and profit of £340m.
The Financial Reporting Council has issued guidance regarding the annual reporting of 1,200 large and smaller listed companies. The letter highlighted the key issues and improvements that can be made in the 2016 reporting season
Baldwins Accountancy Group has continued investment in the north-east and appointed David Fish as a director in its corporate finance team
UK M&A activity bounced back strongly in July and August, according to analysis by the deals practice at PwC.
Smith & Williamson has added Jim Clark and Philip Marsden, of Marsden Clark Corporate Finance Limited, to its corporate finance team.