Geoff Cooper, chief executive of Travis Perkins, has said there could be further consolidation in the building materials sector after his firm said it planned a 拢553m takeover bid for heating and plumbing specialist BSS, writes David Matthews
Cooper (pictured) said that although corporate activity in the sector was subdued, economic conditions were ripe for further takeovers.
鈥淲e haven鈥檛 seen a move towards consolidation yet, but it would be quite normal to see consolidation in an industry as it recovers from recession,鈥� he said.
鈥淲e think that the construction industry is in the middle of a trough and there will be a gentle recovery from here, and believe we can get the benefits of the recovery,鈥� he added.
In a statement to the City, the 拢3bn-turnover firm said both companies had agreed on a strategy for the takeover that hinges on cost savings and efficiencies. The purchase will also boost Travis鈥� heating and plumbing business.
Cooper said: 鈥淚t鈥檚 a great strategic fit for us and creates the largest plumbing and heating trade and retail distribution business in the UK.鈥�
He said Travis Perkins expected to make a formal offer for BSS, which has a turnvoer of 拢1.4bn, in about four weeks, with a final shareholder decision in three months鈥� time.
Kevin Cammack, an analyst with Cenkos, said: 鈥淚t makes a lot of sense for Travis Perkins, but I鈥檓 not entirely sure why BSS is so keen to lose its independence at that price,
given it has seen a significant turn in trading fortunes over the past six months and has no need of help. I would have thought BSS could eke out a better price than this.鈥�
Meanwhile, Charlie Campbell, a Liberum Capital analyst, described the deal as 鈥渟urprising but positive鈥�. He said: 鈥淲e liked Travis shares before the deal and like them more now, not
least because the company鈥檚 fortunes become less tied to the macroeconomy.鈥�
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