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Travis bids for Wolseley units

Travis Perkins Plc, set to become the U.K.’s biggest builders merchant with the purchase of BSS Group Plc, aims to bolster its lead by buying some of the 2.7 billion pounds ($4.3 billion) of assets being sold by Wolseley Plc.

Travis, which acquired the Wickes home-improvement chain for 950 million pounds in 2005 and has agreed to add BSS for 553 million pounds, is interesting in bidding for Wolseley divisions including the Build Center and Encon Insulation chains, Chief Executive Officer Geoff Cooper said in an interview yesterday.

“Wolseley has said it may sell some businesses if they’re underperforming and we’d be interested in some of them,” Cooper said. “If we had the opportunity, for example, to bring Build Center into our portfolio we could make some fairly significant improvements and bring them back to profitability.”

Travis’s 15 percent share of the merchanting market will rise to 20 percent with BSS, putting it ahead of Wolseley on 19 percent and Cie. de Saint-Gobain SA’s Jewson unit on 18 percent, according to Cooper. He said Travis is most interested in buying the heavy building materials and dry lining and insulation stores of Wolseley, which may sell 19 businesses with sales totaling 2.7 billion pounds, CEO Ian Meakins said on March 22.

‘Buying Gains’

“We’ve got good scale in some of those markets and adding a bit more scale would give us very good buying gains, so they’re potentially very good transactions,” Cooper said. “I think some of those businesses might come up for sale.”

Travis has 962 stores that sell only to builders, including 624 own-brand branches. BSS, the U.K.’s largest plumbing and heating chain, will add more than 300 following a takeover agreement on July 5 and Build Center has about 150, though Northampton-based Travis wants only some of these, the CEO said.

The Wickes and Tool Station units sell direct to the public and aren’t part of the company’s merchanting portfolio.

Cooper said it’s not clear when the Wolseley assets will become available, and that the Reading, England-based company may seek to improve the stores before trying to sell them.

Wolseley’s Meakins said in March that he won’t “dally” in disposing of unprofitable units, while adding that a decision on some of the businesses may take “a couple of years.” The company said it couldn’t comment further today.

Cooper said Travis is unlikely to target purchases in mainland Europe in the near future and that forays from other U.K. builders merchants have suffered because of a lack of understanding of foreign markets. The company said in 2008, before the credit crunch and subsequent recession, that it was keeping a “watching brief” on Europe and might expand there.

Travis’s advisers on the BSS deal are HSBC Holdings Plc and Nomura Holdings Inc.

Source : Howard Mustoe - Bloomberg

05 August 2010
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