Grafton Group plc has announced that it has entered into an agreement to divest its Traditional Merchanting Business in Great Britain for an enterprise value of £520 million to Huws Gray. Grafton will retain freehold properties with development potential that have a market value of circa £25 million. This agreement follows the announcement in April 2021 of a strategic review of the business.
Grafton’s GB merchanting businesses include: Buildbase (138 branches), PDM Buildbase in Scotland (25 branches), Civils and Lintels (21 branches), NDI (6 branches), The Timber Group (6 branches), Bathroom Distribution Group (2 branches) and Lloyd Worrall (5 branches).
In the year to 31st December 2020, the Business reported revenue of £828.2 million (2019: £1.02 billion) and adjusted operating profit of £18.8 million (2019: £33.3 million). Gross assets at 31st December 2020 were £497.2 million. Grafton will retain responsibility for the UK defined benefit pension scheme which was closed to future accrual at the end of 2020 when alternative arrangements were put in place.
Huws Gray will be notifying the transaction to the Competition and Markets Authority. The divestment is expected to close by the end of the first quarter of 2022 and completion is not conditional on the outcome of the CMA process.
Following completion in 2022, the Grafton Group plc will, in the normal course of events, update shareholders and the market on the use of the proceeds from the divestment which will be receivable in full in cash on completion.
The decision to divest followed a comprehensive strategic review of the Business which concluded that exiting this segment of the building materials distribution market in Great Britain would enable the Group to optimise shareholder value. Grafton will continue to develop its Selco Builders Warehouse branch network and its other specialist distribution and manufacturing businesses in Great Britain that have been the focus of significant investment and value creation over recent years. Completion of this transaction will also enable the Group to focus on its international development strategy which will be a key priority over the coming years.
Commenting on the divestment, Gavin Slark, Chief Executive Officer of Grafton said: “The divestment secures future opportunities for all stakeholders as part of an enlarged general merchanting business. I would like to thank all our colleagues in the Business for their longstanding contribution to Grafton and wish them every success in the future. This is an attractive outcome for Grafton and is in line with our strategy of deploying our capital resources towards higher growth potential businesses offering superior returns.”
Terry Owen, Founder and Chairman of Huws Gray, said: “We are thoroughly excited and feel extremely privileged to be able to acquire such a well-respected name in the industry. This has given us the opportunity to more than double our branch network and substantially increases our geographical footprint. We look forward to working alongside our new colleagues and continuing on our exciting journey.”
Ian Northen, Huws Gray CEO, added: “We look forward to meeting our new colleagues across the business at the earliest opportunity. Through this acquisition, by working together as one team, we will continue on our journey, with a clear focus to deliver the best service possible to all our customers, at the same time as creating opportunities for new and existing colleagues.”
