Archie Norman warned Wesfarmers not to purchase Homebase

Following criticism in Australia of Archie Normans involvement in the 2016 Wesfarmers acquisition of Homebase, in an unprecendented move, advisers close to the deal have spoken out.

It's now understood that Mr Norman, current Chairman of Marks and Spencer and still an adviser to Wesfarmers, warned the Australian conglomerate that its acquisition of Homebase, the British DIY chain, was not a good idea.

The information comes from two individuals closely involved with the deal, who have confirmed that Mr Norman wrote to the chairman and chief executive outlining the risks of the proposed acquisition before the board approved the deal. “He wasn’t in favour of the transaction, which he believed would not move the dial for the group and therefore wasn’t worth the risk,” said one person close to the deal.

As well as putting his concerns in writing, apparently Mr Norman spoke directly with Wesfarmers Managing Director at the time Richard Goyder. The people close to the deal say Mr Norman warned Wesfarmers that Homebase had been struggling for some years and could be difficult to integrate with its successful Bunnings chain in Australia, which has larger stores and a different range of products

The disclosure about Mr Norman’s involvement follows recent criticism in the Australian press that he allegedly failing to warn the Wesfarmers board about buying Homebase. At the time of the deal, Mr Norman was an adviser to Coles, Wesfarmers’ grocery business and he was not involved with their Bunnings DIY business. He joined the advisory board of Bunnings UK and Ireland following the acquisition.

In an announcement to the Australian Stock Exchange last week, current Managing Director Rob Scott (who was not involved with the original deal) said the strategic rationale for the acquisition was sound and close to blame the problems on 'self induced' issues created by poor execution by the BUKI management team. He criticised the loss of management knowledge in the UK, the speed of the transition to the Bunnings brand and decisions to remove certain product lines.

Read - Wesfarmers admit Homebase disaster

Source: Insight DIY Team

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