The Wesfarmers Ltd (ASX: WES) share price is gaining today after the Australian Competition and Consumer Commission declared it won’t oppose Bunnings’ acquisition of Beaumont Tiles.
The competition watchdog has found the acquisition proposed by Bunnings – a subsidiary of Wesfarmers – won’t significantly decrease competition among Australian tile retailers.
At the time of writing, the Wesfarmers share price is $55.70, 0.7% higher than its previous close.
For comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 1.4% today. The All Ordinaries Index (ASX: XAO) is also up 1.3%.
Let’s take a closer look at today’s announcement from the ACCC.
Bunnings’ acquisition gets the go ahead
The Wesfarmers share price is in the green amid news the ACCC won’t stop Bunnings from acquiring Beaumont Tiles.
The watchdog noted that Bunnings doesn’t currently have a large presence in tile sales in Australia.
However, it did warn it will pay particularly close attention to any further acquisitions the home improvement and lifestyle retailer might make.
Wesfarmers announced in April that Bunnings planned to purchase the speciality tile retailer. The Wesfarmers share price gained 1.1% on the day the news was released.
Following the acquisition, the two businesses will operate separately with the current Beaumont Tiles management to continue in their roles.
How much the home improvement giant will pay for Beaumont Tiles hasn’t been disclosed.
ACCC commentary
Commenting on the acquisition, ACCC chair Rod Sims said:
Specialist tile retailers have a far more extensive range [than Bunnings], displayed in dedicated tile showrooms with specialist staff who can provide design and product advice to customers and referrals to tilers…
By contrast, Bunnings generally sells small volumes of tiles in-store to Do-It-Yourself customers, and tilers, and other trades people undertaking small jobs…
Stronger competition may pose challenges for some tile retailers, but it is unlikely to lead to a substantial lessening of competition in this market.
Beaumont Tiles has more than 110 retail locations in Australia, whereas Bunnings has more than 300 stores nationwide.
Wesfarmers share price snapshot
Today’s boost included, the Wesfarmers share price has gained 8% year to date. It is also 25% higher than it was this time last year.
The post Wesfarmers (ASX:WES) share price gains as ACCC approves Bunnings acquisition appeared first on The Motley Fool Australia.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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