Materials conglomerate Grafton Group has agreed to sell a range of its UK builders merchant businesses for £520m.
Independent merchants Huws Gray, which is backed by a private equity investor, has agreed to buy the Buildbase, Civils & Lintels, PDM Buildbase, The Timber Group, Bathroom Distribution Group, Frontline and NDI brands. This businesses turned over £828.2m with an adjusted operating profit of £18.8m in the year ending 31 December 2020. The acquisition will see Huws Gray take on roughly 250 merchant branches and 3,500 staff.
The agreement to sell by Grafton Group came after a strategic review determined the company could get better returns by deploying its resources elsewhere. “It is in line with our strategy of deploying our capital resources towards higher growth potential businesses offering superior returns,” chief executive Gavin Slank said.
In addition, the group also said it plans to double down on its international development strategy. The supplier currently operates across the UK, Ireland and Netherlands. Grafton will retain and develop its Selco business in the UK.
On the other side of the deal, Terry Owen – founder of Huws Gray – emphasised the scale of the acquisition: “This has given us the opportunity to more than double our branch network and substantially increases our geographical footprint.” The Anglesey-based merchant builder is backed by the private equity firm Blackstone.
As a next step, Huws Gray will approach the Competition and Markets Authority (CMA) for the regulatory approval. It is expected that processing the divestment will take until the first quarter of 2022. Until then, business will continue as usual for both parties.