PLUMBING giant Wolseley has sold off its loss-making Irish arm to private investor-backed company WIBHM in a €26.5m (£23.8m) deal.
The sale of its 67-strong branch network includes its Heat Merchants, Brooks, Tubs and Tiles and Encon Ireland trading brands in the Republic of Ireland, along with its Northern Irish Brooks business.
In the year ended 31 July 2009, the businesses had combined sales of €237m and underlying operating losses of €34m.
Wolseley said the sale of the businesses was in line with its strategy of focusing its activities where it has built sufficient scale, has established leading market positions and can deliver an appropriate financial return.
Some €6.5m was paid on the completion of the deal with the balance to be satisfied through the issue of a €20m loan note of one year duration with a coupon of 10 per cent.
Under the terms of the agreement, Wolseley has also agreed to fund the deficit in the Northern Ireland pension scheme (currently estimated to be €5.5m), and this will be repaid by the purchaser by means of a separate loan note with a coupon of three per cent.
Ian Meakins, chief executive of Wolseley, said: “I am confident that the transaction we have concluded with WIBHM represents a good outcome for Wolseley’s shareholders. It will also enable us to bring an even greater degree of focus on driving performance improvement in our core UK businesses.”