What does Argos selling Homebase mean for eBay’s Fulfilment Network?

Argos NewburyArgos’ parent company, Home Retail Group (HRG), have flogged their Homebase arm for £340 million. Homebase will be rebranded as Bunnings after the buyout by Australian retail group Wesfarmers.

Following completion of the transaction, after £50m going to the Home Retail Group Pension Scheme and other costs of about £75m, about £200m will be returned to HRG shareholders.

The acquisition will make Wesfarmers the 2nd biggest DIY chain in the UK, giving them a 265 store platform from which to challenge the market leading B&Q. Product brands owned by HRG, such as Habitat, Schrieber and Hygena will be excluded from the sale, but certain of these brands will be licensed for use by Homebase for one year.

The sale of Homebase now leaves the way clear for Sainsbury’s to revisit their offer in acquiring Argos, although it appears HRG would be more than happy to carry on as a standalone business with John Coombe, Chairman of HRG saying “the Board will remain focused on the continuing transformation of our Argos business and the options for delivering shareholder value, supported by a strong overall financial position“.

From Sainsbury’s point of view the sale of Homebase is largely irrelevant. They’d have sold Homebase on anyway and had shown no interest in getting into the DIY market.

What does the sale of Homebase mean to eBay?

Argos smThe pilot will enable eBay customers to purchase items from participating eBay business sellers and collect items in store from selected Argos stores. Of course little of this is of interest to Tamebay readers, our real interest is where does this leave eBay’s click and collect and drop off at Argos fulfilment network?

We believe that their might be a couple of Homebase stores included in eBay’s fulfilment network, filling in gaps in the country where there isn’t an Argos store – eBay will probably lose these. Other than that it’s business as normal and unless Sainsbury’s manage to convince Argos shareholders and board that a take over is in their interest we’d expect the status quo to remain.

Even if Sainsbury’s do manage to acquire Argos, the chances are that not only would they welcome the eBay connection, but they’d have to honour the multi-year agreement eBay and Argos signed. The up side is that we might be able to collect eBay purchases from Sainsbury’s stores, but it looks like Argos wants to go it alone and that their preference would be to reject any offer.