Grafton Group to sell merchanting business

Building materials distributor Grafton Group has announced that it is to sell its traditional, UK-based merchanting business to builder merchant Huws Gray for £520 million.

According to Grafton, the businesses being sold as part of the deal include the Buildbase, Civils & Lintels, PDM Buildbase, The Timber Group, Bathroom Distribution Group, Frontline and NDI brands.

The company added that it will continue to develop its Selco Builders Warehouse brand, as well as a number of additional specialist distribution and manufacturing brands that are based in the UK.

A spokesperson from Grafton Group added that the deal will also make it possible for the firm to focus on its international development strategy, which will become one of its key priorities.

Gavin Slark, Grafton's chief executive, added that the divestment will secure future opportunities for all stakeholders as part of an enlarged general merchanting business.

Mr Slark added: "This is an attractive outcome for Grafton and is in line with our strategy of deploying our capital resources towards higher growth potential businesses offering superior returns."

The deal follows the announcement in April that the Grafton Group, which also owns Woodies DIY and Chadwicks, would be undertaking a strategic review of the business. According to Grafton, this review revealed that exiting this segment of the building materials distribution market would help the group to boost value for shareholders.

In the year to December 2020, the company's UK merchanting division reported revenue of £828.2 million and adjusted operating profit of £18.8 million. Grafton Group's overall revenue was reported to be £2.51 billion, with adjusted operating profit of £193.3 million.

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