Ferguson plc has confirmed it has entered into an agreement to sell Wolseley UK to Clayton, Dubilier & Rice — a global private investment firm — for a net cash consideration of approximately £308million.
Ferguson’s intention to demerge its Wolseley UK operation was first reported in the autumn of 2019, and the purchase by Clayton, Dubilier & Rice (CD&R) marks another entry of private equity money into the merchant sector following a number of investments in recent years at businesses such as Huws Gray, Parker Building Supplies (and the other firms now making up the Independent Merchant Group) and Grant & Stone.
With offices in New York and London, CD&R has managed the investment of more than $30billion in 95 companies and has traded in Europe for more than 20 years. The transaction represents the twelfth building products and industrial distribution investment completed by the firm over the last decade. For example in 2020, CD&R carved-out White Cap, a leading distributor of specialty construction products, from HD Supply and completed a partnership investment in SIG plc.
Wolseley UK — which operates through 542 branches and three distribution centres — generated revenue of approximately £1.4bn in the year ended July 31, 2020 and will become an independent company wholly owned by CD&R funds and management. Bruno Deschamps, Operating Advisor to CD&R funds and former COO of Ecolab, will serve as Chairman upon the close of the transaction which is expected in the first quarter of 2021.
Current Wolseley Chief Executive Officer Simon Oakland will continue in that role. He commented: “We believe that Wolseley, as a freestanding enterprise, can accelerate growth, enhance customer service, and create rewarding career opportunities for our colleagues. CD&R has extensive experience supporting branch-based networks like ours and shares our vision to continue to build Wolseley’s entrepreneurial culture and relentless focus on customer satisfaction.”
CD&R Partner Christian Rochat said: “Wolseley is a market-leading distribution platform in an industry where CD&R has extensive prior experience and success, and we believe it represents a compelling opportunity to invest at an inflection point and work with a highly credible management team to drive operating improvements and accretive M&A.”
David Novak, CD&R Co-President, added: “Providing strategic capital to corporate, family, and founder-owned businesses has been a central tenet of CD&R’s strategy for more than forty years. The disruption of the past ten months has demonstrated the constructive role that we can play providing both capital and operating capabilities to support good businesses. We have a great appreciation for the strengths of Wolseley and look forward to partnering with the leadership team.”
From the Ferguson perspective, CEO Kevin Murphy said: “We are confident the business will benefit from working with its new owners, Clayton, Dubilier & Rice who will develop the business further by focusing on continued opportunities in the industry. We’d like to thank all our associates for their tireless hard work while they have been part of the Group, especially recently through the COVID-19 pandemic. We wish them all the very best for the future.
“The transaction further simplifies the Group and allows us to focus entirely on investing in and developing our business across North America where we have the greatest opportunities for profitable growth.”