After sale of Home Timber & Hardware.
Following a seven month sale process, Woolworths has agreed three separate contracts to facilitate its exit from home improvement for estimated gross proceeds of $1.5 billion. After estimated wind-down costs, Woolworths expects approximately $500 million prior to any shareholder payments.
GA Australia has provided an underwritten recovery for the value of Masters inventory and has been appointed to manage sell-down. It is subject to certain adjustments and is estimated to deliver gross proceeds of approximately $500 million. Woolworths will honour all customer gift cards, product warranties, returns, lay-bys and contacted home improvement projects and will work constructively with all suppliers.
Masters will cease trading at all stores on or before 11 December, 2016. Woolworths aims to shift employees to other jobs within the Group, or will pay full redundancy where suitable roles are not available.
Woolworths CEO Brad Banducci (pictured) said, “When I was appointed CEO in February, I said exiting the Home Improvement business was a top priority. Today’s announcement delivers on that commitment. These agreements are the result of an intensive seven month process of reviewing all possible options for exit and extensive negotiations. This decision means management can focus on driving the momentum in our core business.”
“The agreements provide certainty to our Masters team, suppliers and customers. It is the right resolution for our shareholders. The Home Consortium transaction remains subject to Lowe’s consent.
“Woolworths’ top priority remains to do the right thing by our employees, customers, suppliers and shareholders. We will provide a certain and transparent timetable to all our stakeholders during the exit process.
“Since the sale process began, our 7,700 staff in the home improvement businesses have worked extremely hard in an uncertain environment and we sincerely thank them for their commitment,” he added.
Subject to Lowe’s consent, Home Consortium (Aurrum Group, Spotlight Group and Chemist Warehouse) has proposed to purchase the Masters properties through acquisition of the shares in Hydrox.
The transaction will include 40 Masters freehold trade sits, 21 Masters freehold development sites and 21 Masters leasehold sites. Home Consortium plans to repurpose the former Masters sites into multi-tenant large format centres. Woolworths will acquire three Masters freehold sites and take assignment of 12 leases to facilitate a complete exit of Hydrox.
Citi is acting as financial advisor to Woolworths and King & Wood Mallesons is acting as legal advisor to Woolworths.