Wolseley to acquire Denmark's DT Group for €1.5 billion |
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Mon, 24 Jul 2006 13:05
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LONDON - Plumbing supplier Wolseley will shell out more than £1 billion to acquire Denmark's DT Group, which is a top supplier of building materials in the Nordic region. The company said that it had reached an agreement with DT owners CVC Partners and the deal would be worth €1.5 billion (£1 billion). This figure is excluding €484 million debt of DT, which will also be assumed by Wolseley.
DT Group operates in Denmark, Finland, Sweden and Norway and its main business involves supplying materials to trade buyers. DT supplies material amounting to 7 percent of the wholesale market and 13 percent of the DIY market. "We are delighted to announce this acquisition, which gives us a major presence in the Nordic region for the first time and significantly broadens our European reach," said Charles Banks, Wolseley chief executive. "DT Group enhances our position in building materials in Europe and provides a platform for future growth. We look forward to working with the DT Group management and employees as part of the Wolseley Group and to driving the business forward together."
DT Group has 8,000 employees and 256 outlets and Mr Banks said the employees would remain in place for now. Steen Weirsoe, DT's current president and chief executive would also retain his post within Wolseley's European division.
Analysts said the deal made sense for both companies. "Investor concerns may focus on the pro-forma level of debt, gearing of 128 per cent but interest cover 7x, or that further European expansion is being undertaken at a time when its French operations are not firing on all cylinders," said Andy Brown, analyst at Arbuthnot Securities. Analysts at Numis Securities opined that the deal looked complete, "However, this is explained by the strategic rationale of the deal as the acquisition gives Wolseley its first business in the Nordic building materials sector."
Wolseley shares increased 9 pence to £10.88 in early trading.
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Wolseley expects higher sales in the U.S. 