By Emily Bencic 

Bank of America Merril Lynch (BAML) believes Wesfarmers could face “heavy losses” in its acquisition of Homebase as the Brexit vote is likely to push the UK economy into a recession due to currency and political risk.

In a report released late last week, BAML analyst David Errington (pictured) said, “If Wesfarmers cuts its losses and eliminates any plans in the foreseeable future to grow Homebase, we believe the damage to shareholder returns can be isolated to the initial capital outlay (just under $700 million) and the capitalised value of the lease commitments (estimated to be around $2 billion).

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This story first appeared in Appliance Retailer.