Wolseley–After Lightning Quick Ramp Up–Wants Less Stock in Trade
From PROSALES, By Andy Carlo: Here’s the headline: Wolseley Seeks To Sell or Dump Stock by Aug. 1, No. 2 U.S. LBM operation looking for a joint venture partner.
Click on image for access to current Wolseley share information.
Wolseley Plc revealed today that it is in the process of identifying a joint venture partner for Stock Building Supply, the second-largest U.S. pro dealer, or else will exit the business by Aug. 1. “A number” of unnamed companies are interested in acquiring all or part of Stock, the U.K.-based company said in a statement issued by Stock.
In a report released this morning, Wolseley said the decline in housing starts, coupled with a continued decline in lumber prices, have expedited the company’s decision to pursue a sale or joint venture, or to dispose or exit Stock Building Supply, by Aug. 1. Wolseley also announced that it will try to raise 1 billion pounds ($1.42 billion) in a rights issue.
“We are working very closely with Wolseley to identify potential partners that can help Stock Building Supply grow when the market recovers,” Stock Building Supply President Joe Appelmann said in a separate statement. “Our business model has fundamental differences from the remainder of Wolseley’s portfolio, and in these economic times it makes sense to explore other options.” (more)
Here’s Wolseley’s take on its “outlook,” from its statement today:
Outlook
The Board is confident that the measures announced today represent a comprehensive package to strengthen the balance sheet and strongly position the Group for the future.
The Board believes that the downturn in the UK, Irish and Nordic economies is likely to be generally more severe than that experienced in the remainder of Continental Europe.
If markets deteriorate further than anticipated, the Board will ensure further actions will be taken to mitigate the resulting impact.
Whilst actions will continue in our core businesses to reduce costs and generate cash, there will be a clear focus on margin management, serving the customer base and developing market opportunities.
This is a player that seemed to announce the purchase of another point of United States distribution every week, through 2006 and into 2007. The headwinds to Wolseley finding a deal are huge, given the domancy of home building, and horizon for recovery in starts activity that slides farther way by the day.
Capacity at the level Stock provides is a question. For home builders, who might have considered the network a prime way to ensure capacity when volumes were humming along, that type of verticalization is unheard of these days unless it translates into immediate cuts to direct costs on per square footage that can be translated into move-off-the-sideline new home prices.
Wolseley has its work cut out for them on this challenge.
Update: ProSales editor Craig Webb has produced a map of Stock locations as they were listed by the company from Jan. 09, and posted it in his blog.
Comments
Leave a Reply