Bunnings to add Beaumont Tiles to its retail line-up

Competition watchdog allows Bunnings to buy Beaumont Tiles but will ‘carefully’ watch any takeovers of more specialist retailers.

The competition watchdog has approved Bunnings’ acquisition of Beaumont Tiles.

Perth-based conglomerate Wesfarmers is set to add specialist retailer Beaumont Tiles to its stable of retail brands after the competition regulator gave the green light to its acquisition by hardware giant Bunnings.

The Australian Competition and Consumer Commission said on Thursday it would not oppose the acquisition of Beaumont Tiles by Bunnings, which is owned by Wesfarmers, after an investigation found the transaction was not likely to substantially lessen competition.

It adds another chain to the Wesfarmers portfolio, after Bunnings also recently acquired Adelaide Tools, while Wesfarmers stablemate Officeworks bought tech support company Geeks2U.

Bunnings has been buying up smaller specialist retailers to fill the gaps in own hardware operations. Beaumont Tiles will give it a stronger exposure to the tiling sector as well as other related building products segments.

“At first glance, Bunnings taking over a major tile retailer appears concerning, but our investigation found that Bunnings is not a strong competitor in tile sales. This is not a case of a close competitor buying up its rival,” said ACCC chairman Rod Sims.

However the competition regulator cautioned Bunnings did not have the green light to keep buying up smaller specialist retail chains, and each deal would be scrutinised.

“The ACCC’s decision not to oppose this deal is based on the specific circumstances and should not be read as any indication that the ACCC will reach the same conclusion in relation to future possible acquisitions by Bunnings,” Mr Sims said.

“The way in which Bunnings is competitively constrained by specialised retailers, and the potential impact on customers and manufacturers, varies depending on the product and market circumstances.

“Any future expansion by Bunnings into more specialist retailing categories through acquisition of existing competitors will be very carefully considered by the ACCC.”

In this case the ACCC found that specialist tile retailers compete much more closely with each other than with Bunnings.

“Specialist tile retailers have a far more extensive range, displayed in dedicated tile showrooms with specialist staff who can provide design and product advice to customers and referrals to tilers. Specialists also have stronger relationships with larger builders, and usually deliver tiles direct to work sites,” Mr Sims said.

“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.”

The ACCC has warned Bunnings it will carefully consider any future acquisition of specialist retail categories. Picture: David Mariuz

Market participants who spoke to the ACCC highlighted Bunnings’ lack of services offered by specialist retailers such as product or design advice as a particular reason it is not a strong competitor to specialist tile retailers.

The ACCC said it undertook extensive inquiries with customers, local and overseas tile suppliers and competitors, and examined financial information and company documents to inform its assessment.

“There is little doubt that the proposed acquisition will allow Bunnings to compete strongly with specialist tile retailers, particularly in supplying larger builders who Bunnings has struggled to attract to date,” Mr Sims said.

“Stronger competition may pose challenges for some tile retailers, but it is unlikely to lead to a substantial lessening of competition in this market.”

Bunnings chief executive Michael Schneider welcomed the ACCC’s decision.

“Beaumont Tiles is a well-run business that operates in a large, competitive category that has strong growth prospects. The acquisition represents an opportunity to build on the success of the Beaumont Tiles business and invest in its future growth.

“The current management team will remain in place and Beaumont Tiles will continue to be based in Adelaide and we can’t wait to welcome the team to the Bunnings family,” he said.

Beaumont Tiles is a national specialist tile retailer and franchise operator. It has over 110 retail locations in Australia supplying tiles, tiling ancillaries (including glues, grouts, sealers, cleaners, adhesives, floor trimming, tools and underlay) and bathroomware.

Bunnings recently bought South Australian-based Adelaide Tools, which it will rename Tool Kit Depot as it expands nationally.