Woolworths Limited (Woolworths) has announced it will commence an orderly process to exit its home improvement businesses, Masters Home Improvement and Home Timber & Hardware, (a joint venture with US based Lowe’s Companies Inc called Hydrox Holdings Pty Ltd) through a prospective sale or wind-up process.
It is estimated that Woolworths could fetch up to $2 billion selling the Masters stores, stock and property holdings. 39 of the 63 sites are owned by the company.
Fierce rival Bunnings is understood to have ear-marked 15 prime sites which could fetch $40 million per property as reported by The Australian.
Investors welcomed the news with Woolworths shareholders seeing the stock rise 4.3 per cent during Monday's trading.
Woolworths stated in its announcement that the process would take several months and the business would continue to trade normally through this period.
According to the statement, a recent review of the operating performance of Masters indicated that it would take "many years for Masters to become profitable. We have determined we cannot continue to sustain ongoing losses from this business."Lowe’s has given Woolworths notice of its election to be able to exercise its put option under the joint venture agreement. As a result, Woolworths revealed it intended to exercise its call option to acquire the 33.3% stake held in by Lowe’s, which would allow it to control the exit process.
Woolworths stated that this would allow it to "focus our energy and resources on strengthening and executing our plans in our core businesses of Food, Liquor and General Merchandise. "Hydrox Holdings currently operates 63 Masters big-box home improvement stores and the Home Timber & Hardware chain.
If Woolworths is unable to sell all of the business and has to close any of the operations, it will seek to provide alternate employment opportunities within the Woolworths Group to all current Home Improvement employees.