24th Oct 2005 07:01
Wolseley PLC24 October 2005 NEWS RELEASE 24 October 2005 Wolseley plcAcquisition update including the £140 million acquisition of Encon, a leading UK distributor of insulation materials Wolseley plc, the world's largest specialist trade distributor of plumbing andheating products to professional contractors and a leading supplier of buildingmaterials, announced today that, since the last acquisition update on 18 October2005, it has completed a further two acquisitions including the acquisition ofEncon, a leading distributor of insulation products in the UK. Since the beginning of the financial year on 1 August 2005, a total of tendistribution businesses in Europe and North America have been acquired for anaggregate consideration of approximately £235 million in cash. These tenacquisitions are expected to add approximately £357 million to group turnover ina full year. Goodwill related to these acquisitions is estimated to be around£166 million. European Distribution---------------------On 22 October 2005, Wolseley UK acquired insulation distribution specialistEncon from 3i and certain Encon management and staff. The acquisition is in linewith Wolseley's strategy of expanding its European distribution operations intorelated construction materials. The cash consideration of £140.5 million will befinanced from Wolseley's existing resources. The Encon business Encon is the second largest insulation distributor in the UK with around an 11per cent market share. With around 550 employees across a network of 22 branchesin the UK, Encon is a leading operator specialising in mineral fibre insulation,foam insulation and drywall, ceiling and partition products. The insulationmarket promises strong growth in response to legislation for improved thermaland acoustic performance in new and existing buildings. Furthermore, increasingfuel prices and demands for energy conservation, along with an increase in loftconversions and timber frame construction, are also expected to keep theinsulation market buoyant. Wolseley believes that there will be significant opportunities for growth andsynergies between Encon and Wolseley UK, particularly the distribution ofEncon's 14,000 insulation and dry-lining products through Wolseley UK's networkof branches. The key operational management of Encon will remain with the business and jointhe Wolseley group reporting to Adrian Barden, Managing Director, Wolseley UK. Financial effects of acquisition For the year ended 31 August 2005, Encon reported sales of £169.0 million andoperating profit, before goodwill amortisation, of £9.7 million. Gross assets atthat date were £71.2 million. The acquisition is expected to be earningsenhancing from the outset. The return on gross capital employed is expected toachieve Wolseley's normal acquisition return target. North American Plumbing and Heating Distribution------------------------------------------------In October 2005, Ferguson acquired Camellia Valley Supply ("CVS"), a waterworkswholesaler based in Sacramento, CA, from Pacific Coast Supply, LLC. Theacquisition of CVS strengthens Ferguson's waterworks position in NorthernCalifornia, adding three new locations and expanding its customer base. In theyear ended 31 March 2005, CVS had sales of $33.8 million (£18.8 million) and hadgross assets of $12.5 million (£6.9 million) at that date. The divisional split of the total acquisition spend since 1 August 2005 is: Division No. of Acquisitions Spend £ million European Distribution 3 161North American Plumbing & Heating Distribution 7 75US Building Materials Distribution - - TOTAL 10 236 Charlie Banks, Group Chief Executive of Wolseley said: "We are delighted to announce these new acquisitions which will furtherstrengthen our presence in Europe and North America. I am particularly pleasedwith the Encon acquisition which supports our strategy of expanding the range ofconstruction products we distribute. Encon makes Wolseley the second largestplayer in the UK insulation market when previously we had little presence. It isan excellent company and it operates in a market which should providesignificant opportunities for future growth." ENQUIRIES: Investors/Analysts: Guy Stainer 0118 929 8744Head of Investor Relations 07739 778 187 Press:Penny Studholme 0118 929 8886Director of Corporate Communications Brunswick 020 7404 5959Andrew FenwickDeborah Fairbrass Exchange Rates The following exchange rates have been used for the acquisitions noted above:£1 = $1.80. Certain statements included in this announcement may be forward-looking and mayinvolve risks, assumptions and uncertainties that could cause actual results todiffer materially from those expressed or implied by the forward lookingstatements. Forward-looking statements include, without limitation, projectionsrelating to results of operations and financial conditions and the Company'splans and objectives for future operations including, without limitation,discussions of the Company's business and financial plans, expected futurerevenues and expenditures, investments and disposals, risks associated withchanges in economic conditions, the strength of the plumbing and heating andbuilding materials market in North America and Europe, fluctuations in productprices and changes in exchange and interest rates. All forward-lookingstatements in this respect are based upon information known to the Company onthe date of this announcement. The Company undertakes no obligation to publiclyupdate or revise any forward-looking statement, whether as a result of newinformation, future events or otherwise. It is not reasonably possible toitemise all of the many factors and events that could cause the Company'sforward-looking statements to be incorrect or that could otherwise have amaterial adverse effect on the future operations or results of the Company. Notes to Editors Wolseley plc is the world's largest specialist trade distributor of plumbing andheating products and a leading supplier of building materials to professionalcontractors in North America, the UK and Continental Europe. Group sales for theyear ended 31 July 2005 were approximately £11.3 billion and operating profit,before goodwill, was £721 million. Wolseley has around 60,000 employeesoperating in 14 countries namely: UK, USA, France, Canada, Ireland, Italy, TheNetherlands, Switzerland, Austria, Czech Republic, Hungary, Belgium, Luxembourgand Denmark. Wolseley is listed on the London and New York Stock Exchanges (LSE:WOS.L, NYSE: WOS) and is in the FTSE 100 index of listed companies. -- ENDS -- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ferguson