Wolseley considering Better Bathrooms bid

Wolseley, the FTSE 100 building materials group, is considering a possible £100m bid for Better Bathrooms, the online and high street retailer.

The bathroom company, which was founded by an amateur eBay trader, may sell. A year ago it sold a minority stake to the Business Growth Fund (BGF). The move follows a series of approaches from private equity and rival firms, thought to have included Wolseley.

Wolseley’s interest in Better Bathrooms will come as a surprise, because it is only four years since the company sold its high street bath retailer Bathstore. At the time, the heating and plumbing distributor said that the disposal was in line with its strategy of focusing on core operations.

Bathstore was offloaded to the turnaround fund Endless for £15m, which made five times its investment when it sold the business in July in a management buyout backed by an American billionaire, Warren Stephens.

Bidders for Better Bathrooms are said to have been lured by its impressive sales growth and popular website. The company’s sales, split equally between bricks and mortar and online, have jumped from just £1m in 2007 to £31.1m last year. Pre-tax profits were £4m.

The Wigan-based company was founded 12 years ago by eBay entrepreneur Colin Stevens, who started out selling golf equipment, clothes and anything else he could lay his hands on.

When his supplier ran out of stock, his mother suggested selling taps, which proved so popular he turned the venture into a bathroom retailer.

Three years later Mr Stevens opened his first showroom in Wigan. The business now employs 200 staff and has sites in Wigan, Warrington, Manchester, Leicester, York and Slough and is planning to move further south and have 25 showrooms within three to five years. Mr Stevens reportedly has ambitions for the Better Bathrooms brand to be as big as B&Q.

According to the global market researchers Mintel, the UK bathroom fixtures and fittings retail market is currently valued at £1bn annually and is expected to experience continued growth.

The BGF injected £10m in return for a 30pc stake and Paul Gilbert, the non-executive chairman of The Gym Group and former managing director of Matalan, joined as chairman of Better Bathrooms as part of the deal. The BGF is a £2.5bn fund set up by the UK’s five biggest banks – Lloyds, the Royal Bank of Scotland, Barclays, HSBC and Santander – to invest in and support small companies.

The fund, which is chaired by Sir Nigel Rudd, invests in entrepreneurial companies, typically managed by their founders. Other portfolio companies include BarBurrito and Boost Juice Bars.

DC Advisory, the corporate finance house, has been appointed to field interest from potential suitors.

Source : Ashley Armstrong - The Telegraph
www.telegraph.co.uk/finance/newsbysector/banksandfinance/privateequity/11170997/Wolseley-eyes-return-to-retail-with-Better-Bathrooms.html