Wolseley has bolstered its North American and European businesses with a £37m shopping spree
The building materials company has bought two US-based firms and a business in Switzerland. The latest acquisitions are part of Wolseley’s aim to grow the business 10% every year. In particular, it wants to expand in the USA where it has a 9% market share.
Including the latest purchases, Wolseley has spent about £260m on 18 acquisitions since the beginning of the financial year on 1 August 2004.
The additions are expected to contribute almost £490m to group turnover in a full year.
In the USA, Wolseley has bought Full Service Supply, a plumbing and heating distribution company based in Pennsylvania. FSS operates in 33 US states, as well as in Canada, and achieved a £74m turnover in 2004.
In a second deal, Wolseley’s US building materials distribution business has bought Davidson Industries, based in the city of Indianapolis, with a turnover of £35m.
In Switzerland, the company acquired Niklaus Energie to expand its European distribution business. It has six branches in Switzerland, with a turnover of about £15m.
Charles Banks, group chief executive, said the deals were part of the wider strategy to grow the business through acquisition as well as organic growth.
He has earmarked the USA as a priority for growth. Although Wolseley’s business in the USA accounts for 60% of overall turnover, its 9% market share leaves room for expansion. The fragmented nature of the US market, which is driven by the housing sector, means there are opportunities for acquisitions.
The UK is the best performing part of Wolseley’s business in Europe, driven by the demand in the repair, maintenance and improvement sector, as well as growth in social housing.
Wolseley’s appetite for acquisition is part of a trend of consolidation among materials companies in the past year. The most notable deal was Travis Perkins’ purchase of the Wickes DIY chain last year, which it snapped up for £950m.
As a FTSE-100 company with a group turnover of £5.3bn, Wolseley is in a strong financial position to expand.