Travis Perkins to return net proceeds from P&H sale to shareholders

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on May 21, 2021
  • Travis Perkins plc sells its P&H unit to an affiliate of HIG Capital.
  • The £325 million deal is expected to close by the end of August.
  • Travis Perkins announces 35 pence per share of a special dividend.

An affiliate of H.I.G Capital (investment firm) has bought Travis Perkins plc (LON: TPK) plumbing and heating business for £325 million. Following the completion of the transaction that is expected by the end of August, Britain’s largest seller of building materials said, it intends to return cash to its shareholders.

Travis Perkins opened about 3% up in the stock market on Friday but lost half of the intraday gain in the next hour. Including the price action, it is now trading at £16.34 per share versus a lower £12.96 per share at the start of the year.

Travis Perkins announces a special dividend

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

Travis Perkins announced 35 pence per share of a special dividend to return net proceeds from the sale to its shareholders. The remaining, it added, will be returned in the form of a share repurchase programme.

The news comes almost a month after the London-listed company demerged Wickes (home improvement business). In 2018, Travis Perkins had outlined a plan to shrink its portfolio. The sale of the plumbing and heating unit on Friday marks the completion of that plan. Commenting on the news, Davy Research said on Friday:

“Shareholders are now left with a smaller, trade-focused business with annual revenues of over £4bn, consisting of a market leader in building distribution and the rapidly growing Toolstation.”

In separate news from the United Kingdom, Electra Private Equity said on Friday it intends to list TGI Fridays and Hotter Shoes as it prepares to wind down.

CEO Nick Roberts’ remarks on Friday

Last month, Travis Perkins noted a 17% decline in its Q1 comparable sales. The Northampton-based company’s plumbing and heating business reported £1.7 million of pre-tax loss in 2020 and £1.04 billion of revenue. According to CEO Nick Roberts:

“A significant amount of work has gone into improving the P&H business over the last few years, and I am sure that the business will continue to make excellent progress under the ownership of H.I.G.”

“Looking forward, the group has a bright future as the leading provider of building products in the UK, and we look forward to setting out our plans later in the summer to continue to drive growth,” he added.

Travis Perkins performed fairly downbeat in the stock market last year with an annual decline of more than 15%. At the time of writing, it is valued at £3.68 billion.

Invest in crypto, stocks, ETFs & more in minutes with our preferred broker, eToro
10/10
67% of retail CFD accounts lose money