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Travis Perkins launches BSS Group Bid
29th May 2010
Merchanting Group Travis Perkins has made an indicative offer to acquire BSS Group plc, whose operations include key UK oil equipment resellers PTS Plumbing Trade Supplies, F&P Wholesale and Spendlove C Jebb. BSS shares rose sharply in response to the offer.
The Directors of both BSS Group and Travis Perkins have already consulted with key institutional shareholders, who have reacted positively to the proposal which values BSS Group at c.£550m. The offer is made up of 232.91 pence in cash and 0.2608 new Travis Perkins shares for each existing BSS share. Travis Perkins has also confirmed that payment of BSS Group's dividend for 2009/10 of 6.09p per share will also go ahead.
BSS has reacted favourably to the offer and is currently prepared to recommend the offer to shareholders.
According to Travis Perkins, further consolidation in the UK building materials merchanting sector offers the business significant scale benefits in terms of cost savings and improved operational efficiency. In addition, the company believes the recession has accelerated the long-term trend of customers' increasing use of different distribution channels to source building materials.
Against this backdrop, Travis Perkins argues there is a powerful strategic logic which underpins a combination of Travis Perkins' plumbing and heating activities through its existing distribution and retailing businesses, with BSS.
Specifically, Travis Perkins cites the following benefits an enlarged group will enjoy:
- The combination would create the leading plumbing and heating trade and retail distribution business in the UK;
- The enlarged group would have operational and financial size and scale to purchase products more competitively and secure the benefits of global sourcing;
- The enlarged group should allow customers to be serviced more efficiently locally and nationally using Travis Perkins' low cost, layered "route to market" supply chain;
- The BSS business should benefit from being integrated into Travis Perkins' information technology platform, thereby reducing the reliance on external vendors; and
- Travis Perkins' medium and long term property strategy should give both businesses access, at lower cost, to attractive trading locations.
Having successfully integrated a number of merchanting and retailing businesses into the Travis Perkins group, Travis Perkins claims similar success can be achieved through a combination with BSS and that the enlarged group should be well placed to realise synergies arising from purchasing efficiencies and the removal of central costs.
Established in 1899 as British Steam Specialities Limited, BSS Group is today best known to British Oil Heating Technicians via its PTS Plumbing Trade Supplies (itself formed in 1999 through the merger of Zenith and PTS) business in Great Britain and the company's Spendlove C Jebb operation in Northern Ireland. The company also has a small Spendlove C Jebb branded operation in the Republic of Ireland.
Travis Perkins can trace its origins back even further than BSS, with a legacy stretching back almost 200 years. Today's business was formed in 1998 by the merger of Travis & Arnold and Sandell Perkins. Today, the company's primary operating divisions are Travis Perkins' Builders' Merchants; Keyline Builders' Merchants; City Plumbing Supplies; Commercial Ceiling Factors; Wickes DIY; Benchmarx and Tile Giant. The company also has a 30% stake in Toolstation.
