No end to Wolseley’s buying spree
Building materials wholesaler Wolseley has continued its buying spree and added insulation distributor Encon and North American plumbing company Camellia Valley Supply to its global portfolio.
Wolseley, the world’s biggest plumbing and heating distributor, raised $1.2bn (£677m) last week through a private placement to more than 30 institutional investors, which was marketed by the Royal Bank of Scotland and the Bank of America. The re-financing will allow it to pay down existing debt and reduce its annual interest bill. The company has a stated aim of spending an average of £250m a year on bolt-on acquisitions. It funds growth both through debt and through cashflow and is just under 50 per cent geared.
Wolseley bought Encon, which has 22 branches and 550 employees, from British private equity fund 3i last week for £140.5m. Encon’s key personnel will remain in place.
The company said: “There will be significant opportunities for growth synergies between Encon and Wolseley UK, particularly the distribution of Encon’s 14,000 insulation and dry-lining products through Wolseley’s British network.” Camellia Valley Supply is a California-based waterworks wholesaler previously owned by Pacific Coast Supply. It recorded year end sales in March of $33.8m.
Wolseley’s group chief executive Charlie Banks said: “We are delighted to announce these new acquisitions which will further strengthen our presence in Europe and North America.
“The Encon acquisition supports our strategy of expanding our range of construction products. Encon makes Wolseley the second largest player in the British installation market when previously we had little presence.”
In the last four years, Wolseley’s sales and dividends have both risen by 56 per cent.
It has recently focused solely on plumbing and building supplies, but prior to that it dabbled in other engineering businesses including the now defunct Wolseley car manufacturer.
