Ferguson to sell Nordics building materials business to Lone Star

Plumbing and heating products distributor Ferguson - formerly known as Wolseley - has agreed to sell its Nordics building materials distribution business, Stark Group, to an affiliate of private equity firm Lone Star Funds for €1.03bn on a debt-free and cash-free basis.

Transaction and other costs relating to the disposal are expected to be in the region of €50m, while net assets of the business being disposed are around €500m. Ferguson has retained approximately €150m of property assets which it expects to sell in due course.

In the year to the end of July 2017, Stark generated ongoing revenue of €2.15bn and an ongoing trading profit of €65m, with gross assets of €1.15bn.

Following completion of the deal, expected early next year, Ferguson will update the market on its asset allocation plans including the utilisation of excess cash.

Chief executive John Martin said: "The sale of Stark Group will secure an excellent future for our people and will continue to ensure that customers' needs are met. The transaction represents a good outcome for Ferguson shareholders and will enable us to continue to focus on our strategy of accelerating profitable growth in our plumbing and heating businesses."