Materials firm says both companies have agreed on strategy behind takeover, which will boost its heating and plumbing business

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.”