Travis Perkins sells plumbing and heating division for £325m

A signage is pictured at Travis Perkins, a timber and building merchants yard in St Albans, Britain October 22, 2020. REUTERS/Paul Childs
Proceeds from the sale will be given back to shareholders in the form of a 35p special dividend, and a share buyback programme if possible, the builders merchant said. Photo: REUTERS/Paul Childs

Travis Perkins (TPK.L) has offloaded its plumbing and heating business to an affiliate of investment firm HIG Capital, in a deal worth £325m, ($461m).

The move comes as the home improvement company, which is the largest seller of building materials in the UK, completes plans to simplify its business. It has been reducing its portfolio since 2018.

Proceeds from the sale will be given back to shareholders in the form of a 35p special dividend, and a share buyback programme if possible, the builders merchant said.

The deal is expected to be completed within the next three months.

Shares climbed 1.2% in London on the back of the news, valuing the company at £3.7bn.

Shares climbed 1.2% on Friday. Chart: Yahoo Finance
Shares climbed 1.2% on Friday. Chart: Yahoo Finance

“Today marks another important step on our journey to becoming a simplified group, focused on our market leading trade businesses,” Nick Roberts, chief executive, said.

“A significant amount of work has gone into improving the plumbing and heating business over the last few years and I am sure that the business will continue to make excellent progress under the ownership of HIG.”

Earlier this year Travis Perkins completed the demerger of its home improvement business Wickes (WIX.L), with shareholders voting almost unanimously for the move, which was halted due to the outbreak of COVID-19.

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Travis Perkins, which also owns the Toolstation chain, revealed in its most recent trading update that sales increased at the start of this year, and that it had continued strong momentum from the second half of last year.

Like-for-like sales rose by 17.4% in the opening three months of the year, boosted by a 42% growth at Toolstation as consumers turned their hands to DIY after spending more time at home.

Total sales growth for the business was 6.8% compared to the same period last year.

“Looking forward, the group has a bright future as the leading provider of building products in the UK and we look forward to setting out our plans later in the summer to continue to drive growth,” Roberts added.

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