Wolseley plots sale of tool hire business
Proposed sale of Brandon Hire could be the first step in a revamp of the building materials group's UK operations
Sunday 04 July 2010
Wolseley has kicked-off the restructuring of its UK arm by putting its tool hire business up for sale.
The FTSE 100 building products giant is looking to cut its net debt, which stood at nearly £1.1bn at the end of April, and asset sales are an option for divisions that do not meet its turnaround strategy.
BDO Stoy Hayward is understood to have been appointed to sell Brandon Hire, which Wolseley bought in a 212p-a-share deal four years ago. One industry expert said that although Wolseley expanded the business by merging Brandon with its own hire operations, it would likely "get less than half" what it paid in 2006.
The tool hire market has been badly hit by the housing downturn, one of the key collapses that caused the recession. Several construction equipment businesses have changed hands recently, including Hewden Stuart, which was bought by Sun European Partners from its Canadian parent, Finning International, in a £110.2m deal.
Private equity houses Cerberus, RJD Partners, Rutland Partners and turnaround group Endless are believed to be considering bids for Brandon. The deadline for first round bids is thought to be later this month.
In March, Wolseley's chief executive, Ian Meakins, announced plans for the future of the company, with 19 of 41 operating businesses placed in a pot called "performance builders". These have to improve their financial performance quickly if they are not to be sold by the group.
The company did not name the "non-core" subsidiaries – though builders' merchants chain Build Center is on the list – so that employees did not worry about their futures. The 19 businesses account for only 5 per cent of profit even though they make up 27 per cent of sales.
Wolseley has since appointed Steve Ashmore as UK managing director in an internal promotion. Mr Ashmore is thought to be looking at the fuinances of a number of UK assets, such as wholesaler Electric Center, that are not part of the core pipes, plumbing, climate control and ventilation businesses.
A sector analyst said: "Brandon is certainly non-core for Wolseley. It just doesn't fit into the scheme of things." A source close to Wolseley added: "Ashmore's team is taking a dispassionate, cold, hard look at these non-core businesses that need to turn around their financial performances."
It has been suggested that BDO has been given a number of other mandates by Wolseley, but the source denied this claim.
The group was in the news last week as activist investor Cevian Capital revealed it had nearly 14.7 million shares (5.2 per cent) in Wolseley.
However, Cevian partner Marcus Alexanderson tried to reassure the market that it was not looking to make trouble, that it backed Wolseley's strategy and was impressed by its businesses.
Wolseley's share price closed at 1322p on Friday, up 1.93 per cent on start of day's trading. This means that the market values the company at nearly £3.7bn.
- 1 BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
- 2 Number of young homeless people in Britain is 'more than three times the official figures'
- 3 The map showing the most dangerous tourist destinations in Europe, according to the Foreign Office
- 4 The biggest first date turnoff has been revealed
- 5 German man found living with 300 rats in tiny apartment
BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
Isis propaganda video shows 25 Syrian soldiers executed by teenage militants in Palmyra
Number of young homeless people in Britain is 'more than three times the official figures'
Budget 2015: George Osborne to axe subsidies for higher income earners in social housing
More Britons believe that multiculturalism makes the country worse - not better, says poll
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...