Travis Perkins closes in on £553m BSS Group sale

Building materials firm Travis Perkins has announced it is in advanced talks about a £553m swoop for BSS Group.

In a statement to the City, the £3bn-turnover company said both sides agreed on the strategic logic behind a tie-up, which hinges on the cost savings and efficiencies that will arise.

Travis Perkins will also use the deal with the £1.4bn-turnover BSS to boost its heating and plumbing business.

The statement said: “Travis Perkins believes that 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 believes 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.”

Travis Perkins shares rose 6% to 791p in early trading while BSS shares rose 34% to 436p.

Despite the rises not all were convinced it represented good value for BSS shareholders.

Cenkos analyst Kevin Cammack said: “It makes a lot of sense for Travis Perkins but I’m 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.”

Meanwhile Liberum Capital analyst Charlie Campbell described the deal as “surprising but positive”. He said: “We liked Travis shares before the deal and like them more now, not least because the company’s fortunes become less tied to the macro-economy and more dependent on management’s ability to deliver integration synergies, and we would back them to deliver.”