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Home Retail Buys Habitat U.K. Brand Amid Chain’s Administration

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June 24 (Bloomberg) -- Home Retail Group Plc, owner of the U.K. catalog chain Argos, agreed to buy rights to the Habitat brand in the U.K. and Ireland along with three London stores after the furniture retailer was placed into administration.

Home Retail said today it paid 24.5 million pounds ($39.2 million) in cash to Habitat U.K. Ltd., which owner Hilco U.K. Ltd. has handed over to administrator Zolfo Cooper. Habitat’s 30 remaining U.K. outlets will remain open while talks are held with “interested parties,” Hilco said in a separate statement.

Home Retail Chief Executive Officer Terry Duddy said he plans to build on the iconic Habitat brand, which was started by Terence Conran in 1964. He will expand the Habitat Internet site and add concessions in 25 of its Homebase home-improvement stores. About 150 of Habitat’s 900 workers will join Homebase, including shop workers and its design team, Duddy said.

“There’s no value in undermining the brand, it’s about reinforcing the integrity of it,” Duddy said on a conference call. About 25 percent of Habitat’s 4,000 products in furniture, homeware and lighting will be added to Homebase stores, he said.

The transaction includes the exclusive use of the Habitat brand, design and intellectual property and will be funded by existing cash resources, Duddy said.

Finance Director Richard Ashton said Habitat will probably be “marginally loss-making” in the first year of ownership, before moving into profit in the second year as it takes advantage of group sourcing and scale of the Homebase business.

Hilco, a corporate restructuring firm, appointed Zolfo Cooper as administrator to Habitat U.K. It also said it’s in “advanced talks” with a major listed European business for the sale of Habitat’s profitable European arm. Hilco bought Habitat in 2009 from the billionaire Kamprad family, who own Ikea.

To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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