UK's Kingfisher, Travis Perkins rise on Wesfarmers' sale of Homebase

LONDON, May 25 (Reuters) - Shares (Berlin: DI6.BE - news) in British home improvement firms Kingfisher (Frankfurt: 812861 - news) and Travis Perkins (Frankfurt: 893509 - news) rose on Friday after Australia's Wesfarmers quit the UK market, offloading its Homebase unit to a private equity firm.

Retail conglomerate Wesfarmers sold the 255-store loss-making Homebase chain, the No. 2 UK player, for a nominal 1 pound to London-based turnaround specialist Hilco just two years after buying it, ending an ill-fated offshore adventure that cost it $1 billion.

Kingfisher, the UK market leader which owns the B&Q and Screwfix chains, rose as much as 4 percent in early trading, while Travis Perkins, which owns No. 3 player Wickes, rose 2 percent.

Hilco said the 24 pilot stores Wesfarmers converted to the Bunnings brand will convert back to the Homebase brand.

It said it planned to reinvigorate the Homebase brand but did not give any details on its plans for the rest of the store estate or for job numbers. A spokeswoman declined to comment beyond the statement.

Hilco currently manages about 20 investments, with a combined turnover of over 1 billion pounds ($1.3 billion). Previous restructuring projects include music retailer HMV, the UK arm of stationer Staples (NasdaqGS: SPLS - news) and home furnishings retailer Habitat.

Analysts at Jefferies said the Wesfarmers disposal was particularly good news for Kingfisher as Wickes is more oriented towards tradesmen.

"Ultimately, the risk ahead of today was that Wesfarmers would be irrational and back a significant investment to rebrand Homebase stores into Bunnings," they said, reiterating their "buy" recommendation.

They said Homebase under Hilco's ownership would become "much more sensitive to short, and mid-term, margin and cashflow challenges."

On Thursday Kingfisher said its quarterly sales were hit by winter snow storms which kept British and French shoppers at home. ($1 = 0.7491 pounds) (Reporting by James Davey Editing by Keith Weir)