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Thursday, 21 November, 2002, 07:04 GMT
GUS snaps up Homebase
Homebase store
Homebase is the UK's third biggest DIY chain
British retail and business services group GUS has agreed to buy the UK's third biggest DIY chain Homebase.

GUS is to pay 900m ($1.4bn) for Homebase in an effort to broaden its retail operations, the company confirmed on Thursday.

GUS said Homebase would become part of its Argos catalogue store operation, but would continue to trade under its own brand name.

"The acquisition of Homebase is a further example of our determination to create shareholder value," said GUS chief executive John Peace.

"The (Argos Retail Group) management team is well-equipped to drive Homebase's future growth and development."

For sale

The Homebase acquisition follows the stock market launch of GUS' highest profile retail operation, the Burberry fashion group, earlier this year.

Homebase, which runs 300 stores in the UK, was sold to private equity firm Permira by its former owner, the supermarket chain J Sainsbury, in March last year.

Permira, which paid 750m for Homebase, looks set to reap a hefty profit by selling the retailer on to GUS.

Part of the 900m purchase price agreed by GUS will go towards covering some of of Homebase's debts.

The DIY firm was reported to be considering a stock market flotation earlier this year.

GUS' other businesses include the Experian credit-checking firm and a range of South African retail operations.

Profits soar

News of the Homebase takeover came as GUS said profits before taxes and one-off costs had risen to 247m in the six months to late September, 20% up on the same period last year.

Mr Peace said he was "confident" of the outlook for the next six months, "while remaining mindful of the potential impact of economic and political uncertainty."

Investors welcomed the news, marking GUS shares 4.3% higher to 612.5p by late afternoon.

Buying Homebase gives GUS a foothold in the booming UK home improvements market, currently dominated by Kingfisher's B&Q chain.

GUS said the DIY market had grown by 8% annually over the past five years to a total value of about 12bn.

See also:

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