Clayton, Dubilier & Rice (“CD&R”) announced an agreement to acquire Wolseley UK (“Wolseley”), a distributor of plumbing, heating, climate control, pipe and infrastructure & utility products in the United Kingdom, from Ferguson plc (LSE:FERG). Through a carve-out transaction for a net consideration of £308 million ($420 million), Wolseley will become an independent company wholly owned by CD&R funds and management.
The transaction represents the twelfth building products and industrial distribution investment completed by CD&R over the last decade. In 2020, CD&R carved-out White Cap, a leading distributor of specialty construction products, from HD Supply and completed a partnership investment in SIG plc, a UK-listed building products distributor.
In the year ended July 31, 2020 Wolseley UK generated revenue of $1,879 million (approximately £1.5 billion) and underlying trading profit of $8 million on a pre-IFRS 16 basis. Gross assets at July 31, 2020 were $1,093 million. Following
Nearly two-thirds of the company’s revenue is derived from residential renovation, maintenance, and improvement activities. In addition to plumbing and heating products and the associated pipes, valves, and fittings, the company offers air conditioning and refrigeration products to commercial customers as well as products to the civil infrastructure and utilities markets.
Bruno Deschamps, Operating Advisor to CD&R funds and former COO of Ecolab, will serve as Chairman of Wolseley upon the close of the transaction, expected in the first quarter of 2021. Wolseley is led by Chief Executive Officer Simon Oakland, who will continue in that role.
“We believe that Wolseley, as a freestanding enterprise, can accelerate growth, enhance customer service, and create rewarding career opportunities for our colleagues,” said Mr. Oakland. “CD&R has extensive experience supporting branch-based networks like ours and shares our vision to continue to build Wolseley’s entrepreneurial culture and relentless focus on customer satisfaction.”
“Wolseley is a market-leading distribution platform in an industry where CD&R has extensive prior experience and success, and we believe it represents a compelling opportunity to invest at an inflection point and work with a highly credible management team to drive operating improvements and accretive M&A,” said CD&R Partner Christian Rochat.
“Providing strategic capital to corporate, family, and founder owned businesses has been a central tenet of CD&R’s strategy for more than forty years,” David Novak, CD&R Co-President, observed. “The disruption of the past ten months has demonstrated the constructive role that we can play providing both capital and operating capabilities to support good businesses. We have a great appreciation for the strengths of Wolseley and look forward to partnering with the leadership team.”
Clifford Chance and Debevoise & Plimpton LLP served as CD&R’s legal advisors in the transaction.
Kevin Murphy, Chief Executive of Ferguson, commented: "Wolseley is a leading heating and plumbing distribution business in the UK and we are confident the business will benefit from working with its new owners, Clayton, Dubilier & Rice who will develop the business further by focusing on continued opportunities in the industry. We’d like to thank all our associates for their tireless hard work while they have been part of the Group, especially recently through the COVID-19 pandemic. We wish them all the very best for the future.
The transaction further simplifies the Group and allows us to focus entirely on investing in and developing our business across North America where we have the greatest opportunities for profitable growth.”