Wolseley wins race to buy Brooks

Wolseley confirmed yesterday that it has won the race to acquire Brooks, the Republic's third biggest builders' merchanting firm.

The deal brings to an end a lengthy period of speculation on the future of Brooks, which was put up for sale by its Finnish owner, UPM-Kymmene, earlier this summer.

Wolseley beat off competition from interested parties including Heiton and timber-frame company Century Homes.

The acquisition is based on an estimated cash consideration of €183 million, with Wolseley expecting, separately, to gain at least €53 million from the sale of "a number" of Brooks properties.

This property valuation is seen by some as conservative, with one site owned by Brooks at North Wall in Dublin thought to be worth at least €50 million alone.

Possible buyers for these properties are likely to include Treasury Holdings and Zoe Developments.

Brooks is seen as a significant buy for UK-based Wolseley, which already owns the Heatmerchants and Tubs & Tiles chains in the Republic.

It provides the company with a firm base in the lucrative but fragmented Irish merchanting market.

Brooks holds about 6 per cent of this market, which is estimated to be worth close to €3 billion.

Grafton, which operates Chadwick's outlets, commands a further 9 per cent or so, while Heiton has 10 per cent through Heiton Buckley.

Wolseley group finance director Mr Steve Webster said yesterday that the firm would seek to grow this market share over coming years.

"Growth will come from a combination of organic growth, new branch openings, and selective acquisitions," he said.

Wolseley will be seeking a return on capital of 18 per cent on the investment within three years, he added.

Brooks currently has 18 branches and employs about 430 people. It posted operating profits of €9.4 million on turnover of €195 million last year. Heatmerchants, meanwhile, had sales in the region of €100 million for the 12 months to the end of July, with operating profits climbing from €4.5 million to €6.2 million over the year. The chain has 50 outlets.

Wolseley is planning "significant synergies" between Brooks and Heatmerchants, as well as between Brooks and other Wolseley operations abroad.

Mr Webster said Wolseley could see its branch presence in the Republic rising to 100 outlets.

Part of this will see Wolseley operate on a "branch within a branch" basis, thus making products from both chains available under one roof.