READING, England -- Wolseley has signed an agreement to sell Build Center, its building materials distribution business in the UK, to Saint Gobain. It has also entered into exclusive negotiations with Saint Gobain to sell Brossette, its plumbing and heating distribution business in France. Total consideration for the two transactions is £310 million.
In the year ended 31 July 2010 Build Center generated revenue of £316 million and trading profit of £1 million. In the 11 months ended 30 June 2011, revenue was £294 million and trading profit was £4 million. Net assets at completion are expected to amount to approximately £136 million. The disposal will complete for consideration of £145 million when the transaction has received competition clearance.
In the year ended 31 July 2010 Brossette generated revenue of £648 million and a trading loss of £7 million. In the 11 months ended 31 June 2011, revenue was £590 million and trading profit was £5 million. Net assets of the business are approximately £150 million. The transaction, completion of which is subject to employee consultation and competition clearance, is expected to result in the disposal of the business for consideration of £165 million.
In each case completion may take several months. Sale proceeds, receivable at completion in cash, will be used to pay down debt.
Total gross assets that are the subject of these transactions amounted to £409 million at 31 January 2011.
Following completion of the transaction and associated transitional services in the UK, unrecovered overheads are expected to amount to approximately £1 million per month. Wolseley will review the size and scale of the functions required to support the remaining core business going forward and associated restructuring costs are expected to amount to approximately £15 million.
Ian Meakins, Chief Executive of Wolseley plc commented:
“The transactions we have announced today are the last significant disposals planned following last year’s strategic review. We will continue to focus and invest in our strongest businesses in core markets including building materials and wood solutions in France and plumbing, heating, pipe, climate and associated businesses in the UK.
When concluded, these transactions should present good opportunities for staff transferring and ensure that our customers’ ongoing needs are well met. I would like to pay tribute to the considerable commitment and energy of our staff in Brossette and Build Center and thank them for all of their hard work during an uncertain period.”