UPDATE: Travis Perkins Agrees To Buy BSS Group For GBP557.6M

5th Jul 2010 08:23

(Adds detail.) By Jonathan Buck Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Builders' merchant and home improvement retailer Travis Perkins PLC (TPK.LN) Monday said it had agreed to acquire specialist distributor BSS Group PLC (BTSM.LN) for GBP557.6 million, creating the leading plumbing and heating trade and retail distribution business in the U.K. The deal will bring Travis Perkins operational and financial size and scale to purchase products more competitively and secure the benefits of global sourcing, and allow it to service customers more efficiently locally and nationally. Travis Perkins expects to benefit from shorter plumbing and heating refurbishment cycles, a backlog of required upgrading work, 'aspirational' makeovers for bathrooms, rising energy costs that encourage more fuel-efficient systems and an increasing need to manage and conserve water resources, among other things. It also sees cross-selling opportunities within the enlarged group and expects to generate revenue synergies in areas such as providing heavy-side building products to some of BSS's customers and providing specialist plumbing and heating products handled by BSS to some Travis Perkins customers. "Our respective businesses are complementary and we look forward to working with BSS's customers, suppliers and employees," said Travis Perkins Chairman Robert Walker in a statement. "We are confident that this transaction can deliver significant value for the shareholders in the enlarged group." Travis Perkins, which operates the national chain of Wickes DIY retail outlets, will pay 435.8 pence per BSS share. That comprises 232.91 pence in cash, 0.2608 new Travis Perkins shares valued at 196.8 pence based on the closing price Friday of 754.5 pence per share, and payment of the BSS final dividend for the year ended March 31 of 6.09 pence. The price represents a premium of 4.7% to the closing price of BSS shares Friday of 416.2 pence and a premium of 34% to the closing price May 27, the last business day before the two companies disclosed advanced discussions about a possible offer. A mix-and-match facility and a loan note alternative also are available. Travis Perkins will fund the cash component from existing facilities. Under the terms of the deal, if a maximum number of 33.4 million new Travis Perkins shares are issued, BSS shareholders will hold about 13.8% of the total share capital. Travis Perkins believes it can achieve annual pretax cost savings from the deal of at least GBP25 million in 2013, comprising about GBP19 million from purchasing benefits and GBP6 million from overhead savings. The one-off costs of delivering those savings are expected to be roughly GBP5 million, the majority of which will be incurred in 2010. Total integration costs of about GBP6 million are expected to be incurred over 2010 and 2011. Travis Perkins expects the acquisition will deliver materially enhanced earnings in 2011, the first full year after completion. BSS, of Leicester, England, in the year ended March 31 reported adjusted pretax profit of GBP49.6 million on revenue of GBP1.35 billion. Travis Perkins, of Northampton, England, in 2009 posted pretax profit of GBP212.7 million on revenue of GBP2.93 billion. At 0712 GMT, Travis Perkins shares traded up 3 pence, or 0.3%, at 757 pence. -By Jonathan Buck, Dow Jones Newswires; +44 (0)207 842 9237; [email protected] (END) Dow Jones Newswires July 05, 2010 03:23 ET (07:23 GMT)