Wolseley, a UK-listed building materials group, has refused to confirm reports that it has been approached by private equity firm Cinven about a potential £10 billion (€14.9 billion, $19.5 billion) take-private deal.
Shares in Wolseley rose as much as 8 percent this morning, after UK newspaper City A.M. reported that Cinven and its adviser Goldman Sachs had been planning a bid for the last three months.
However, Wolseley’s head of investor relations Guy Stainer told Bloomberg that the company is not in talks with Cinven and isn’t aware of any bid.
Cinven has also refused to confirm its interest. A source told Reuters that the reports were exaggerated, suggesting that a bank had proposed the idea to the firm, “but Cinven is not interested”.
Earlier, City A.M. reported that Cinven is looking for a partner so it can break up the firm’s European and American operations. The American arm has been struggling in recent months due to the slowdown in the US housing market – profits are expected to be down 15 percent for the last five months of 2006, and the company has said it will cut 4000 jobs in the region.
Since Wolseley’s current market capitalisation is just over £9 billion, it would be difficult for Cinven to bid for the company without a partner. The firm’s previous biggest deal was the $4.4 billion acquisition of travel services group Amadeus in 2005, and that was completed in partnership with BC Partners. The firm is currently investing from its fourth fund, which it closed last year at €6.5 billion ($8.5 billion).
The news comes in the wake of a flurry of activity in the housebuilding sector. Market leader Barratt recently bought smaller rival Wilson Bowden for £2.2 billion, while HBOS and Sir Tom Hunter are closing in on a £713 million deal for Crest Nicholson. The two previously combined to buy McCarthy & Stone last year.
Wolseley’s share price has risen 25 percent in the last six months amid speculation that a buyout offer could be imminent. At 12:00 GMT today, shares were trading at 1380.00p, up 5.18 percent.