Merchant Focus: Developing picture

Merchant Focus: Developing picture

The pace of activity in the merchant sector shows no sign of letting up, with a series of recent moves illustrating a number of the broader trends that are occurring within the market — private equity investment, group expansion and the parallel-yet-opposing movements of further diversification for some and greater rationalisation for others. PBM considers some of the biggest stories from recent weeks.

Announced towards the end of May and following long term speculation, Travis Perkins plc has confirmed the disposal of its Plumbing & Heating business to an affiliate of H.I.G. Capital — described as a global alternative investment firm, with over €36 billion of equity capital under management — for a “cash consideration of £325 million, on a debt-free, cash-free basis and subject to customary adjustments”.

From its Northamptonshire base, the P&H business operates under the 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. 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.

Alongside the recent demerger of Wickes in April, the sale of P&H represents the completion of the Travis Perkins plc intention to “simplify the Group” and “improve returns” through a renewed focus on its General Merchanting business and its Toolstation arm.

Following a series of recent acquisitions to its builders’ and plumbers’ merchant businesses in and around the South West of England — 3Counties, CRS Building Supplies, Total Plumbing Supplies, Buildit and RGB — Grant & Stone has now announced the purchase of Devondale Electrical Distributors in a further expansion of its well-established electrical division.

Established in 1981 and reporting revenues of £10m in 2020, Devondale operates from nine branches across Somerset and Devon with its headquarters in Marsh Barton, Exeter.

With the support of investment partner Cairngorm Capital Partners, Grant & Stone’s stated strategy has been to develop its business through a combination of acquisitions, new site development and organic growth. Devondale’s “highly complementary” branch network and product range is said to support this, “providing geographic expansion, product extension and a strong platform for further growth”.

Higgins Building Supplies has been revealed as the latest acquisition made by the Huws Gray Group as part of its ongoing expansion programme. Established in 1866 by Thomas Henry Higgins, the Northamptonshire-based business has been under the stewardship of five successive generations of the Higgins family and currently operates from a 4.5-acre depot and landscaping centre in Wellingbrorough plus a third site in Irthlingborough.

With the purchase expanding the Group’s presence in the East Midlands and signalling a move to “connect” its established sites in the North West and South East, Huws Gray’s Head of Acquisitions Matthew Owen said: “This latest acquisition of a well-known and highly respected company in the industry is a perfect fit for us to strengthen and expand our branch network. We’re not just buying a business; we’re buying over 150 years of history and we are looking forward to working alongside the existing teams and learning from their industry-leading landscaping offer.”

This article can be found in the July/ August 2021 issue of PBM.

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