Travis Perkins buys BSS for £557.6m
Published: 05 July, 2010
NORTHAMPTON: Travis Perkins is to buy BSS Group for an agreed £557.6m to become the country's biggest plumbing and heating trade and retail distribution business.
Travis Perkins said the deal should be completed in the fourth quarter and boost earnings from next year, and it had irrevocable undertakings or letters in support of the deal from shareholders owning about 35% of BSS.
Travis Perkins said it would pay 232.91 pence a share in cash and 0.2608 new shares for each BSS share, equivalent to 435.8 pence a share based on Friday's closing prices and including BSS's final dividend of 6.09 pence a share.
That is 34% above BSS's closing share price on May 27, the day before the two firms announced they were in talks, and broadly in line with the price mooted at that stage.
Some analysts had suggested a rival bidder might emerge, with France's Saint Gobain tipped as a possibility. However, any competing proposal was likely to have emerged by now.
Robert Walker, chairman of Travis Perkins said: "We believe that there is a strong strategic rationale for the acquisition of BSS which will create the leading plumbing and heating trade and retail distribution business in the UK. Our respective businesses are complementary and we look forward to working with BSS's customers, suppliers and employees. We are confident that this transaction can deliver significant value for the shareholders in the enlarged group."
Travis Perkins said it expected to achieve at least £25m annual pre-tax cost savings from the deal by 2013, including about £19m from improved buying terms with suppliers and £6m reducing overheads. These will cost around £5m pounds to deliver, which will be booked in 2010, while further integration costs of around £6m are expected over 2010 and 2011.
Travis Perkins shares were up 0.4 percent at 757.5 pence this morning. BSS shares were up 2.1 percent at 425.1 pence.
Travis Perkins, which raised £300m in a rights issue last year to ease concerns about its debts, said the cash part of the deal would be funded from existing debt facilities.