Grafton’s move for Heiton

THE proposed takeover of builders’ merchant and DIY group Heiton by larger rival Grafton has taken a fresh twist with news that British builders’ products group Wolseley is set to beef up its presence in Ireland.

Wolseley is understood to be the front runner in the race to buy Brooks, which holds the number three slot in the Irish builders’ providers market behind Heiton and Grafton.

The British company is believed to have prepared a E200 million offer for Brooks. Heiton’s interest in acquiring Brooks believed to have triggered the approach from Grafton that became public last month.

Heiton has consistently refused to comment on its position in relation to Brooks, citing confidentiality agreements. But market analysts said Grafton’s proposal, which valued Heiton at 6.35 per share or E325 million, was an attempt to snap up the owner of Atlantic Homecare and builders’ merchants Heiton Buckley without falling foul of competition watchdogs.

Heiton rejected the proposal, saying it was “paltry” and failed to put a fair value on the company.

Wolseley is valued at over E7 billion and already has a foothold in Ireland through the Heatmerchants group and bathroom and tiling supplier Tubs & Tiles. Heiton’s share price surged 26% to 6.70 when news of the Grafton approach emerged, but has since given up some of its gains and retreated to 6.50. Analysts have said a deal will be done between 7-7.50, but Grafton’s reputation for driving a hard bargain could yet prove a sticking point.

Grafton, whose brands include Woodie’s DIY and builders’ merchant Chadwicks, already owns a 29% stake in Heiton. But observers feel Heiton’s share price could suffer if it fails to get its hands on Brooks, and that could strengthen Grafton’s hand when takeover talks resume.

Heiton chief executive Leo Martin has maintained that Heiton can deliver strong returns to shareholders as an independent entity and that it is capable of making large-scale acquisitions in its own right.