Plumbing and heating specialist BSS Group is set to be taken over by rival Travis Perkins in a £533 million deal, underlining TP’s strategy of targeting the £6.5 billion-a-year retrofit market and beefing up its product offering.
TP has been tracking BSS for some time and the addition of the plumbing specialist will add to Travis Perkins’ existing service, bringing its plumbing division on a par with Plumb Centre, owned by Wolseley.
Travis Perkins finance director Paul Hampden-Smith said: “BSS is a good business with a strong management team and a proven track record.”
“The business will give us exposure to an area where we are under-represented [plumbing and
heating].” Following the deal, Travis Perkins hopes to benefit from the stronger buying terms BSS has with suppliers in the plumbing and heating sector.
Mr Hampden-Smith said: “BSS has significant buying terms with significant manufacturers
in the plumbing and heating sector. We hope that we can come down to their buying terms.”
The takeover is likely to be reviewed by the Office of Fair Trading, which Travis Perkins does not see as a barrier to any deal going ahead, despite the deal comfortably making the firm the largest in the builders’ merchants sector.
The enlarged group will have sales of over £4bn and in the last financial year would have made combined pre-tax profits of £178m.
It would also employ close to 20,000 members of staff. This would make the group significantly bigger than the number two in the UK, Wolseley, and could mean that with more buying power suppliers are squeezed to generate efficiencies for the firm.
Competition in the trade sector is set to increase in the future as B&Q rolls out its Trade Point offering in store.
This is dedicated to trade professionals, with B&Q aiming to increase its share of the market. In a trading update released to the stock exchange this week, B&Q owner Kingfisher said: “The Trade Point offer, which is exclusive to the trade professional, is expected to boost Kingfisher’s low share in the professional trade market.”
The offer for BSS has been accepted by its board of directors and further announcements on the progress of the deal are expected in around four weeks.
The takeover offer values each BSS share at 433p, a 33 per cent premium to the level the shares were trading at the day before the deal was announced.