Travis Perkins plc has announced the disposal of its Plumbing & Heating distribution business to an affiliate of H.I.G. Capital – described as a leading global alternative investment firm with over €36 billion of equity capital under management – for cash consideration of £325 million, on a debt-free, cash-free basis and subject to customary adjustments. The transaction is expected to be completed within the next three months, subject to regulatory approval.
Headquartered in Northamptonshire, the P&H business operates under its primary trading brands of City Plumbing Supplies and Plumbing Trade Solutions (PTS), with over 350 branches across the UK and Ireland, alongside several specialist online outlets including The Underfloor Heating Store, Direct Heating Spares, PlumbNation, and National Shower Spares.
The company is led by Dave Evans and supported by an experienced senior leadership team, and a statement from H.I.G said that its investment “will support P&H in its transition to an independent company and accelerate its customer-focused expansion in the UK and Ireland.”
Alongside the recent demerger of Wickes, the sale of P&H represents the completion of the Group’s portfolio actions as outlined at the Capital Markets Day in December 2018. In a statement, the Group notes that given its “strong balance sheet and robust liquidity position” it intends to return the net proceeds of the disposal to shareholders following completion of the transaction through a combination of a 35 pence per share special dividend and, subject to market conditions, a share buyback programme.
Nick Roberts, Chief Executive, commented: “Today marks another important step on our journey to becoming a simplified Group, focused on our market leading trade businesses. A significant amount of work has gone into improving the P&H business over the last few years and I am sure that the business will continue to make excellent progress under the ownership of H.I.G.
“I would like to thank all of our colleagues in the P&H business for their commitment and hard work whilst part of the Travis Perkins Group, particularly during what has been an extremely challenging year, and I wish them all the best for the future.”
He continued: “Following on from the demerger of Wickes in April 2021, the Group has now executed the planned actions to simplify its portfolio and the strength of the Group’s balance sheet enables us to return the net proceeds to shareholders. Looking forward, the Group has a bright future as the leading provider of building products in the UK and we look forward to setting out our plans later in the summer to continue to drive growth.”
In the year ended 31 December 2020, P&H generated revenue of £1,041 million, adjusted operating profit of £17.9 million (including property profits of £1.4m) and a loss before tax of £1.7m. Gross assets at 31 December 2020 were £580 million.
Dave Evans, CEO of P&H, said: “The sale to H.I.G. is great news for P&H and its stakeholders. We are recognised as a market leader across many of our businesses and the categories they operate in and I am very excited to work with the team at H.I.G. to capitalise on the enormous potential for growth we have within the UK and Ireland. We are well positioned to push forward with our plans for growth by developing more customer-focused propositions delivered by over 3,000 dedicated team members. I look forward to building an even stronger business in the coming years.”
Markus Noe-Nordberg, Managing Director and Head of the H.I.G. European Middle Market LBO team which led the transaction, commented: “We are thrilled to welcome the Plumbing & Heating business from Travis Perkins into the H.I.G. family. H.I.G. has had great success investing in speciality distribution assets, and we will use this experience to support management in maximising the Company’s potential. This transaction is an ideal fit with our investment mandate and once more underscores H.I.G.’s ability to execute on complex transactions such as carve-outs.”
Tobias Borkowski, Principal at H.I.G. Europe, added: “We believe that the Company, as a freestanding enterprise, can better serve the individual needs of its customers, and rapidly expand its trusted relationships with suppliers. We are excited to partner with Dave and his entire team and look forward to supporting the Company’s continued growth.”
Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to H.I.G. Capital. Morgan Stanley is acting as financial advisor and Linklaters LLP as legal counsel to Travis Perkins Plc.
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