Grafton Group has entered into an agreement to sell its Buildbase, Civils & Lintels, PDM Buildbase, The Timber Group, Bathroom Distribution Group, Frontline and NDI brands to Huws Gray.
The deal comprise approximately 200 merchant branches and 3,500 people. Buildbase alone has 149 stores across mainland Britain, which is more than Huws Gray.
Currently, Huws Gray has 113 trading locations and 1,900 employees.
Grafton announced in mid-April that this division was up for sale. Under the agreed deal, it will retain freehold properties with development potential that have a market value of about £25m.
Selco, Leyland SDM and CPI EuroMix are not part of the deal and remain with Grafton.
In the year to 31st December 2020, the business being sold reported revenues of £828m (2019: £1.02bn) and adjusted operating profit of £18.8m (2019: £33.3m). Gross assets at 31st December 2020 were £497.2m.
Huws Gray has had private-equity backing since Inflexion bought into the business in 2018. Blackstone took over from Inflexion earlier this year. However, it remains under the management of its original founders.
It began in 1990 as a single store in Anglesey and has grown primarily through acquisitions – Shropshire Building Supplies, James Wilby Builders Merchants and Ridgeons Building & Timber Merchants in 2018. In the past year it has added Milford Building Supplies (Leeds), Higgins Building Supplies (Wellingborough), Uriah Woodhead & Son (Bradford), AC Roof Trusses (Welshpool).
Until today, Ridgeons – which now trades as Huws Gray Ridgeons across the east of England – was its biggest acquisition, bringing 40 stores in a single deal. The Grafton deal dwarfs that and is considered to be the biggest of its kind in the industry to date, Huws Gray said.
Terry Owen, founder and chairman of Huws Gray, said: “We are thoroughly excited and feel extremely privileged to be able to acquire such a well-respected name in the industry. This has given us the opportunity to more than double our branch network and substantially increases our geographical footprint. We look forward to working alongside our new colleagues and continuing on our exciting journey.”
The deal is subject to customary regulatory approval by the Competition &Markets Authority. Until this process is complete, the businesses will continue to trade independently. This process is expected to close by March 2022 regardless of any CMA intervention.
Grafton chief executive Gavin Slark said: "The divestment secures future opportunities for all stakeholders as part of an enlarged general merchanting business… 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."