By Jason Theodorou

British builders' merchant Travis Perkins will buy the plumbing supplies specialist BSS Group for £557.6 million pounds, to become the UK's biggest plumbing and heating retail distribution business. Travis Perkins hope the move will allow them to meet a growing market for environmentally-friendly buildings.

Travis Perkins agreed to pay 232.91 pence a share in cash, and 0.2608 new shares for each BSS share, which is equivalent to 435.8 pence a share based on closing prices on Friday. Shares in Travis Perkins fell by 5% since the deal was announced, while BSS shares have risen by 32%.

Travis Perkins have long held that consolidation was needed in the plumbing supplies industry. By acquiring BSS, the company expects to negotiate £19 million in purchasing benefits and save £6 million in overheads, amounting to a cost saving of £25 million by 2013.

The deal must still receive shareholder approval, but Travis Perkins has already stated that 35% of BSS investors back the deal, and that the company had received letters of support from investors.

Robert Walter, chairman of Travis Perkins, said: 'We believe that there is a strong strategic rationale for the acquisition of BSS, which will create the leading plumbing and heating trade and retail distribution business in the UK'.

'Our respective businesses are complementary and we look forward to working with BSS's customers, suppliers and employers'.

BSS operates 439 branches in the UK, with revenues of £1.35 billion and profits of £49.6 million. They will add to Travis Perkins' existing 1,238 UK sites.


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